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EHT trades at 9% yield and discount to book as its manager waits for ship to come in

Goola Warden
Goola Warden6/28/2019 7:30 AM GMT+08  • 8 min read
EHT trades at 9% yield and discount to book as its manager waits for ship to come in
Testing valuations “We took corrosion away and put anti-corrosion paint and fortified the hull. The priority of the US$23 million was the structural integrity of the hull and anything related to safety, specifically fire, and we put in US$3 milli
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SINGAPORE (July 1): On May 24, Eagle Hospitality Trust made its debut on the Singa-pore Exchange and immediately fell below its offer price of 78 US cents. One of the underwriters sold more than four million units at 71 US cents each, brokers said. This transaction appears to have imposed a ceiling on the unit price.

In a stabilisation move, DBS Bank announced it purchased 7.99 million EHT units at 73 US cents to 78 US cents each on May 24, followed by a further four million units on May 27. Even before trading started, it turned out that the retail portion was not fully subscribed. EHT owns 18 properties: 17 full-service hotels and The Queen Mary, Long Beach (in California), which comprises a permanently berthed ship called the Queen Mary and an adjacent, mainly vacant, plot of land.

Based on the offer price of 78 US cents, the IPO yield was 8.2%. This translates into a distribution per stapled security — EHT comprises a real estate investment trust (REIT) that holds the properties and a dormant business trust — of 6.396 cents. The forecast DPS for the period from May 24 to Dec 31 is 4.27 US cents, to be paid on March 20, 2020. Subse-quent DPS will be paid semi-annually. In FY2020, the forecast DPS is 6.54 US cents. At EHT’s last traded price of 70.5 US cents, forecast yields are at 9.1% for this year and 9.27% for next year. The net asset value at IPO is 88 US cents, and EHT is now trading at just 0.8 times book value.

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