Eagle Hospitality slides further despite action by stabilising agent
Singapore
STAPLED securities of Eagle Hospitality Trust (EHT) continued to decline on Monday, paring three US cents or 4.1 per cent to finish at US$0.70.
The counter had already shed 6.4 per cent from its initial public offering (IPO) price of US$0.78 to close at US$0.73 on its mainboard debut last Friday, on heavy volume of 23.1 million shares.
The hefty turnover continued on Monday, with 11.5 million units changing hands as a selloff by investors was met by stabilisation efforts by DBS Bank, as it bought back units from the open market to support the price.
According to disclosures to the Singapore Exchange, DBS had bought back nearly 12 million units on the two trading days - almost as many as that by rival ARA US Hospitality Trust's stabilising manager United Overseas Bank since the trust started trading on May 9.
On Monday, ARA US Hospitality Trust traded up half a cent or 0.58 per cent to US$0.87, on a generally flat day for the market. The Straits Times Index (STI) added 0.88 point or 0.03 per cent to 3,170.77, while the FTSE ST Real Estate Investment Trusts index added 0.45 per cent to 862.26.
Before EHT's debut, its managers had announced on Thursday night that the public offer tranche of its IPO, comprising 44.9 million stapled securities, was just 0.4 time subscribed, resulting in the joint bookrunners and underwriters having to take up the bulk of the allotment of unsubscribed securities. A portion of the unsubscribed stapled securities was also re-allocated to the international placement.
This was far worse than ARA US Hospitality Trust, which had its public tranche of 51.1 million stapled securities about 1.1 times subscribed. ARA US Hospitality Trust also managed to stay above water on its trading debut on May 9, closing at its offer price of US$0.88.
While some market watchers remain confident in the quality of EHT's listing portfolio, others cited bad timing as the reason for the poorer take-up and market performance, in the wake of a worsening of the US-China trade spat.
Some observers also believe that the earlier listing of ARA US Hospitality Trust could have siphoned demand away from the subsequent listing of EHT, given the relative similarity between the two trusts.
Asked to comment on EHT's trading performance, Salvatore Takou-shian, CEO and president of the manager, said: "We are not commenting on our share price performance, which is a function of the markets. We remain confident in the long-term prospects of Eagle Hospitality Trust, and look forward to delivering on our strategy of value creation and optimising the performance of our well-invested portfolio."
