Sunday, August 5, 2012

Far East rides on hospitality fever with trust offering

Business Times: Sat, Aug 04

RIDING on the hospitality sector's robust growth, Far East Organization is set to offer investors a bite off its assets via the group's first hospitality trust listing - Far East Hospitality Trust (Far East H-Trust).

The listing of the hospitality stapled group, which comprises both Far East H-Reit and Far East H-BT, is expected to raise some $656 million (excluding an over-allotment option of about $60 million).

Notably, each stapled security will be priced in the range of 86 cents to 93 cents, translating to a forecast yield of around 6 per cent to 6.5 per cent.

And despite its size, Far East H-Trust, which is said to be Singapore's largest deal over a 12-month period, seems to have garnered strong interest bagging numerous cornerstone investors including names such as Aberdeen Asset Management Asia Limited, AIA Group Limited, JF Asset Management Limited and NTUC Income Co-operative Limited.

Explaining the rationale behind the healthy response, Matthew Song, HSBC's head of equity capital markets (South East Asia), said: "This is the only pure-play Singapore hospitality Reit (real estate investment trust). The assets in the trust's portfolio are also on master lease arrangements, providing downside protection to dividend distributions for unitholders. Furthermore, Far East H-Trust also has a committed reputable sponsor who will hold at least 51 per cent of the trust, adding to its draw."

Asset-wise, the trust, which is sponsored by a group of companies under Far East Organization, is expected to feature a total of 11 Singapore properties, including seven hotels and four serviced residences.

DBS Group, Goldman Sachs and HSBC have been appointed as joint global coordinators and, together with OCBC, are also joint bookrunners and underwriters for the IPO, which is expected to be priced on Aug 14 and make its debut on the Singapore Exchange on Aug 27.

Far East Organization is the largest private property developer in Singapore and both an owner and an operator of hospitality properties.

Since its establishment in 1960, Far East Organization has developed a full spectrum of real estate products in the residential, hospitality, commercial, medical and industrial sectors, including over 42,000 or one in six private homes in Singapore.

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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