ARA US Hospitality Trust (ARA H-Reit) is seeking to raise approximately $498 million after pricing its initial public offering in Singapore at $0.88 per stapled security, according to its manager ARA Asset Management.
In a filing with the Singapore Exchange, ARA Asset Management said the offering comprises 379.8 million stapled securities, subject to the over-allotment option. Six cornerstone investors have taken up 132.4 million securities.
The cornerstone investors include Celine Tang, who is the managing director at property firm SingHaiyi Group, her husband, Singaporean businessman Tang Gordon, as well as DBS Bank Ltd, Credit Suisse AG, and United Overseas Bank Ltd on behalf of their clients.
ARA H-Reit is also expected to draw on about $251.8 million of debt facilities by the listing date. Trading is expected to begin on May 9, the prospectus said.
Based on the offering price of $0.88, the trust, which owns a portfolio of 38 US hotels, would offer an annualized distribution yield of 8.0 per cent for 2019, with distribution yield growth of 2.1 per cent in 2020, the filing said.
ARA Asset Management CEO Lee Jin Yong said the strong interest highlights ARA’s investment proposition to offer investors a “unique opportunity” to gain exposure to a “high-quality, upscale select-service” hospitality portfolio in the US in a favourable, tax-efficient manner.
The initial portfolio of ARA H-Reit consists of 27 Hyatt Place hotels and 11 Hyatt House hotels located in the US, with a total of 4,950 hotel rooms and a total appraised value of $719.5m.
Bloomberg earlier reported that the listing is a return to Singapore’s public markets for John Lim, the founder of ARA Asset Management Ltd. A group including Lim and New York-based private equity firm Warburg Pincus had agreed to buy out the manager of real estate trusts in late 2016, valuing the firm at around $1.3 billion.
Lim had said earlier that year his company’s stock was undervalued relative to its earnings, peers, and historical prices.
The ARA IPO will be the first IPO of size in Singapore this year, as companies have raised just $28 million from first-time share sales, according to data compiled by Bloomberg. In 2018, the money raised from the stock exchange’s 15 IPOs, excluding depositary receipts, fell more than 80 per cent to $535 million.
ARA Asset Management Limited is a global integrated real assets fund manager. As at 31 December 2018, the gross assets managed by ARA Group and its associates stood at approximately S$80.1 billion ($58.8 billion) across over 100 cities in 23 countries.