ARA Asset Management registered a prospectus with the Monetary Authority of Singapore to list ARA US Hospitality Trust on the Singapore Exchange in an offering expected to raise gross proceeds of US$498 million, the fund manager said in a filing to SGX Thursday.
Based on the offering price of US$0.88, the trust would offer an annualized distribution yield of 8.0 percent for 2019, with distribution yield growth of 2.1 percent in 2020, the filing said.
The offering will include 379.78 million stapled securities, with an overallotment option, ARA Asset Management said.
The public offer opened Thursday evened and closes Tuesday at noon, with trading expected to begin on 9 May, the filing said.
The trust has commitments of US$116.5 million from six cornerstone investors, including Tang Gordon @ Tang Yigang and Celine Tang @ Chen Huaidan, Bank of Singapore, DBS Bank, Credit Suisse, UOB and ICH Capital, the filing said. The cornerstone investors have subscribed for a total 132.38 million stapled securities, or 23.4 percent of the issue, it said.
ARA US Hospitality Trust is expected to be the first pure-play U.S. select-service hospitality portfolio listed in Singapore, the filing said. Select-service hotels don’t offer extensive facilities or amenities.
The initial portfolio, valued at US$719.5 million, includes 38 upscale hotels with 4,950 rooms across 21 U.S. states, ARA Asset Management said, adding 27 of the hotels are franchised under the Hyatt Place brand and the remainder are under the Hyatt House brand.
For 2018, the portfolio had an occupancy rate of 77 percent and revenue per available room (RevPAR) of US$94, compared with a national average of 66 percent and US$86, the filing said.
The average gross operating profit margin of the portfolio has been around 40 percent over the past three financial years, the fund manager said.
The initial portfolio will be managed by Aimbridge Hospitality, the largest independent hotel management company in the U.S., the fund manager said.
DBS Bank is the sole issue manager for the offering, while DBS Bank, OCBC and UOB are the joint financial advisers and joint global coordinators, it said. DBS Bank, OCBC, UOB and Credit Suisse (Singapore) are joint bookrunners and underwriters, it added.
ARA US Hospitality Trust is a stapled group including REIT ARA US Hospitality Property Trust and registered business trust ARA US Hospitality Management Trust, the filing said.