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ARA US Hospitality Trust's IPO likely to be priced at US$0.88 per unit: term sheet

If successful, this will be Singapore Exchange's first hospitality trust focused purely on US market

Singapore

THE indicative offer price for the upcoming initial public offering (IPO) of ARA US Hospitality Trust is 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 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. 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.

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The cornerstone tranche makes up US$116.5 million or 25.8 per cent of the total offering.

Cornerstone investors include Bank of Singapore (BOS), on behalf of one or more of its private banking clients; DBS Bank, on behalf of certain wealth management clients; UOB, on behalf of certain private banking clients; and Credit Suisse. They also include SingHaiyi's controlling shareholders Gordon Tang and Celine Tang, and investment firm ICH Capital.

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. It 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 will list on the Singapore Exchange.

If successful, this will be the Singapore bourse's first hospitality trust focused purely on the US market.

It will also be the first new counter on the main board 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.