Eagle Hospitality Trust prices IPO at US$0.78, below indications

Singapore

EAGLE Hospitality Trust (EHT) has priced its initial public offering (IPO) at US$0.78 per stapled security, below the indicated range of US$0.80 to US$0.81.

A total of 580.6 million stapled securities are being offered, comprising an international placement of 535.7 million stapled securities to investors, including institutional and other investors in Singapore, and an offering of 44.9 million stapled securities to the public in Singapore.

The manager intends to raise gross proceeds of US$565.8 million, which will be used for payment to the vendors for the purchase price of the initial portfolio; payment of the related acquisition costs of the initial portfolio; payment of issue and debt-related costs; and working capital.

EHT, backed by US-based property investor and developer Urban Commons, is a stapled group comprising Eagle Hospitality Real Estate Investment Trust (EH-Reit) and Eagle Hospitality Business Trust (EH-BT). It has an initial portfolio of 18 full-service hotel properties, with a total of 5,420 rooms and an aggregate valuation of about US$1.27 billion.

The assets span states such as California, Texas, Colorado, Utah, Georgia, Florida, New Jersey and Connecticut. Seventeen of the 18 assets are freehold.

The issuer has projected an annualised yield of 8.2 per cent for the forecast period from May 1, 2019 to Dec 31, 2019. Yield is projected to increase 2.4 per cent for 2020.

Net property income stood at US$47.4 million in FY2018. Projected net property income for the forecast period is US$51.1 million. It is expected to be US$81.3 million in 2020.

Occupancy rate for FY2018 was 73.6 per cent, and revenue per available room (RevPAR) was US$93.90. Projected occupancy rate for the forecast period is 78.5 per cent, with RevPAR of US$107.70.

The growth in RevPAR is expected to be mainly driven by organic market growth, additional rooms after completion of renovation works in FY2018, contracts entered into with corporate clients and government agencies and better revenue management.

Projected occupancy rate for 2020 is 76.8 per cent, with RevPAR of US$110.60 mainly driven by organic market growth.

Investors subscribing for stapled securities under the public offer will pay the offering price in Singapore dollars - that is, S$1.071 per stapled security, based on the exchange rate of US$1.00 to S$1.3731.

DBS Bank; DBS Bank on behalf of certain wealth management clients; Gold Pot Developments Limited and Ji Qi have come onboard as cornerstone investors, which will give them a collective stake of 16.7 per cent after the initial public offering (IPO).

The sole financial adviser and issue manager for the offering is DBS Bank.

DBS Bank; Merrill Lynch (Singapore); UBS AG, Singapore Branch; BNP Paribas, acting through its Singapore branch; Deutsche Bank AG, Singapore Branch and Jefferies Singapore Limited are the joint bookrunners and underwriters for the offering.