ARA US Hospitality Trust indicative IPO price at US$0.88 per unit: Term sheet

THE indicative offer price for an upcoming ARA US Hospitality Trust initial public offering (IPO) is set at US$0.88 per unit, according to a term sheet seen by The Business Times. 

The base offering, which excludes cornerstone investors, stands at US$334.2 million. The indicative forecast distribution yield is said to be 7.8 per cent for the eight-month forecast period of May to December 2019, and 8 per cent for fiscal 2020, the sheet added. 

Out of the total offering size, 64.2 per cent or US$289.2 million will be for an international placement to investors outside the United States. Meanwhile, up to 10 per cent of the total offering size or US$45 million will be set aside for public offer in Singapore and for the reserved tranche.

The cornerstone tranche meanwhile is sized at US$116.5 million or 25.8 per cent of the total offering.

Cornerstone investors include Bank of Singapore, on behalf of one or more private banking clients; DBS Bank, on behalf of certain wealth management clients; UOB, on behalf of certain private banking clients; and Credit Suisse AG. This is along with SingHaiyi's controlling shareholders Gordon Tang and Celine and investment firm ICH Capital.

Meanwhile, the over-allotment option will be at US$20 million, which represents 6 per cent of the base offering. BOS added that the exercise of the over-allotment option will not increase the total number of units issued post-offering.

The expected listing date will be on May 9, with an expected allocation date on May 2 and expected desk close date on April 29, subject to early close.

On Wednesday, ARA US Hospitality Trust lodged its preliminary prospectus with the Monetary Authority of Singapore, which sees real estate investment group ARA Group spinning off US$719.5 million of US hotels under the Hyatt brand into a business trust that it aims to list on the Singapore Exchange (SGX).

If the listing is successful, it will be the Singapore bourse's first hospitality trust focused purely on the US market. It will also be the first new counter on SGX's Mainboard since the July 2018 listing of foodcourt operator Koufu Group.

The proposed ARA US Hospitality Trust will comprise US dollar-denominated stapled securities of ARA US Hospitality Property Trust (ARA H-Reit), which will hold the hotel properties; and ARA US Hospitality Management Trust (ARA H-BT), which will run the hotels.