Eagle Hospitality Trust (EHT) – which has a US hotel portfolio valued at $1.27 billion – has lodged its preliminary prospectus for listing on the Singapore Exchange’s Mainboard seeking to raise around $566 million via an initial public offering (IPO).
This comes barely two days after the $720-million unit offering by US-focused hospitality trust ARA Hospitality Trust (ARA H-Trust).
EHT is a Singapore-based hospitality stapled group comprising EH-REIT, which invests in a diversified portfolio of income-producing real estate assets focusing on US hospitality sector. The group also houses the EH-Business Trust (BT), which will be dormant as of the listing date.
The portfolio of EHT comprises 18 full-service hotel properties (17 of which are freehold assets) in the US, adding to a total of 5,420 rooms with an aggregate valuation of $1.27 billion.
A majority of these hotels (93.6 per cent) are franchised and/or managed by Hilton Worldwide Holdings Inc., InterContinental Hotels Group, Marriott International, Inc., and Crestline Hotel & Resorts Inc.
Los Angeles-based real estate investment firm Urban Commons LLC, which is the sponsor, has put in $174 million of capital expenditure into sprucing up the hospitality assets held in initial portfolio since 2013.
The REIT manager is indirectly 51 per cent owned by Howard Wu, and 49 per cent owned by Taylor Woods, who are co-founders of the sponsor. Each founder owns 50 per cent equity interest in the sponsor. Following the IPO, Wu and Woods’ aggregate stake in EHT will come to 18.3%.
Cornerstone investors include DBS Bank, Ji Qi, founder and executive chairman of Nasdaq-listed Chinese hotel chain Huazhu Group; and Gold Pot Developments, a family fund owned by Gordon Tang who also owns controlling stake in Singapore-listed property developer SingHaiyi.
Eagle plans to offer 566.25 million stapled security (combination of REIT and Business Trust) units tentatively priced at $0.80 to $0.81 apiece. The pro-forma net asset value (NAV) per stapled security is $0.89, and the timing details for the full-listing are not confirmed.
Source: Company’s registration filings
The REIT manager has forecast FY 2019 (May 01, 2019 to December 31, 2019) annualised distribution yield to be around 7.9-8 per cent per annum. For FY 2020, it predicts distribution yield to increase by 2.5 per cent (YoY) to between 8.1-8.2 per cent per annum.
Sumeet Singh, Head of Research, IPOs and Placements for Aequitas Research, and a Smartkarma Insight provider, pointed out that the SGX-listed hospitality-linked REITs are trading around 5.9–6.6 per cent FY 2019 yield, while for US office-focused, Manulife US Reit is trading at 7 per cent FY 2019 yield, while other recently-listed overseas focused REIT, Cromwell European REIT are trading at 8.4 per cent.
Source: Aequitas Research, Smartkarma (April 25, 2019)
DBS is the sole financial advisor and issue manager while DBS, BofAML, UBS, BNP Paribas, Deutsche Bank, and Jefferies are joint bookrunners and underwriters.