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Checking into ARA’s new asset class — a select-service portfolio

Goola Warden
Goola Warden5/6/2019 07:30 AM GMT+08  • 6 min read
Checking into ARA’s new asset class — a select-service portfolio
SINGAPORE (May 6): ARA US Hospitality Trust is offering 377.8 million stapled securities at 88 US cents apiece in an IPO. Of this, 328.6 million stapled securities are reserved for placement. The public offering comprises 51.13 million stapled securities.
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SINGAPORE (May 6): ARA US Hospitality Trust is offering 377.8 million stapled securities at 88 US cents apiece in an IPO. Of this, 328.6 million stapled securities are reserved for placement. The public offering comprises 51.13 million stapled securities. The stapled securities comprise ARA US Hospitality Property Trust (ARA H-REIT), a real estate investment trust, and ARA US Hospitality Management Trust (ARA H-BT), a registered business trust.

The offering, coupled with the stapled securities taken up by cornerstone investors that include sponsor ARA Asset Management, Gordon Tang and DBS Bank, will raise US$498 million ($677.6 million). The public offering opened on May 2 and closes at noon on May 7.

The expected distribution yield for the forecast period, May to December 2019, is 8%, or at an annualised distribution per stapled security of 7.04 US cents each. The expected distribution yield growth of 2.1% for the forecast year FY2020 gives an expected total return of 10.1%, or a projected FY2020 yield of 8.2%, based on DPS of 7.2 cents. Aggregate leverage on listing is 33.4%, giving the manager of ARA US Hospitality Trust some debt headroom to implement an acquisition strategy for growth.

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