Sunday, July 29, 2012

Ascendas Hospitality Trust closes flat on debut

Business Times: Sat, Jul 28

ASCENDAS Hospitality Trust closed unchanged from its initial public offering price (IPO) of 88 cents on its first day of trading on the mainboard of the Singapore Exchange yesterday.

After opening at 87.5 cents at 2pm, the stapled security traded between a high of 89.5 cents and a low of 87 cents before closing the day at 88 cents.

It topped trading volumes, with 61.2 million units changing hands with a value of $53.9 million.

Analysts said the lacklustre debut was expected given that the counter is a business trust.

Kevin Scully, executive chairman of equities research company NRA Capital, said investors would buy the trust for its yield rather than for capital appreciation.

Kim Eng remisier Mac Chan, meanwhile, noted that business trusts have generally not done well. "The people who applied for (Ascendas Hospitality) got it so there's not much buying at the moment," he said.

Ascendas Hospitality has an initial portfolio of 10 hotels worth $1.1 billion in Australia, China and Japan.

Seven of the hotels are in Australia, accounting for 67 per cent of the value of the trust, with one hotel in Japan making up 24 per cent. Two hotels in China make up a further 9 per cent.

Its inseparable stapled securities each contain a unit in a business trust and a unit in a real estate investment trust (Reit).

About 75 per cent of the assets will be in the business trust at the date of listing, with 25 per cent in the Reit. This structure gives the trust more flexibility to develop property.

Nomura and Standard Chartered were joint global coordinators for the offering with HSBC and DBS acting as joint bookrunners. Also involved were Credit Suisse, CIMB Securities, Maybank Kim Eng and UOB-Kay Hian.

The trust had cut the size of its IPO earlier this week after dropping from its portfolio a South Korean hotel. The IPO price of 88 cents was at the bottom of an initial indicative range of 88 to 94 cents.

After the offer was completed, 803 million stapled securities were issued, giving the trust a market capitalisation of $706.6 million.

Slightly more than half - 437.325 million stapled securities - went to institutional investors and the public. The public tranche, comprising 70.1 million stapled securities, was about 6.9 times subscribed. About a third went to sponsor Ascendas Land International, and about 7 per cent to its strategic partner, Accor Asia Pacific.

The remaining 3.5 per cent, or about 28.4 million stapled securities, went to cornerstone investors Splendid Asia Macro Fund and Lianhe Investments - a wholly owned subsidiary of Singapore Press Holdings.

At the IPO price, the distribution yield is expected to be 7.9 per cent for the year to March 31, 2013, and 8 per cent for the following financial year.

Yesterday, the trust said that $634.5 million of the IPO's gross proceeds was used to pay for the acquisition of its properties as well as issue and debt-related costs. The acquisition of its properties was completed yesterday, except for Ibis Beijing Sanyuan, which is pending approval of the Chinese authorities.

Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C
Senior Sales Director
DTZ Debenham Tie Leung (SEA) Pte Ltd (L3006301G)

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