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ARA US Hospitality Trust Seeks $451 Million in Singapore IPO

Joyce Koh
ARA US Hospitality Trust Seeks $451 Million in Singapore IPO

(Bloomberg) -- ARA US Hospitality Trust is seeking to raise $450.7 million in Singapore’s first main board initial public offering this year.

The hospitality group will offer units at 88 cents apiece, according to terms of the deal obtained by Bloomberg. Six cornerstone investors have agreed to invest a combined $116.5 million, equivalent to 25.8 percent of the total offer.

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 LLC agreed to buy out the manager of real estate trusts in late 2016, valuing the firm at around S$1.8 billion ($1.3 billion). Lim had said earlier that year his company’s stock was undervalued relative to its earnings, peers and historical prices.

Singapore’s IPO market has been in the doldrums for some time. 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 percent to $535 million.

ARA US Hospitality Trust’s cornerstone investors will include Credit Suisse Group AG, ICH Capital Pte, veteran Singapore property investor Gordon Tang and his wife Chen Huaidan, as well as Bank of Singapore, DBS Group Holdings Ltd. and United Overseas Bank Ltd., which are subscribing on behalf of their wealth management and private banking clients.

A distribution yield of 8 percent is forecast for 2020 and trading is expected to start May 9. Orders from institutional investors will be taken through April 30 and unit holders can opt to receive their distributions in either U.S. dollars or Singapore dollars. DBS is the sole issue manager while Oversea-Chinese Banking Corp., UOB and Credit Suisse are also helping to arrange the sale.

The initial portfolio will comprise 38 hotels consisting of 27 Hyatt Place properties and 11 Hyatt House hotels located in the U.S., with a total of 4,950 rooms and an appraised value of about $720 million.

--With assistance from Fion Li.

To contact the reporter on this story: Joyce Koh in Singapore at jkoh38@bloomberg.net

To contact the editors responsible for this story: Katrina Nicholas at knicholas2@bloomberg.net, Peter Vercoe

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