ARA US Hospitality Trust posts maiden DPS of 1.36 US cents, 3.8% above forecast

SINGAPORE - Newly listed ARA US Hospitality Trust (ARA H-Trust) on Tuesday (July 30) morning posted its maiden distribution per stapled security (DPS) of 1.36 US cents for the period from May 9 to June 30 this year, about 3.8 per cent above the forecast of 1.31 US cents.

ARA H-Trust made its debut on the Singapore Exchange's (SGX) mainboard on May 9 at 87.5 US cents per stapled security, just slightly below its initial public offering (IPO) price of 88 US cents.

Its distributable income for May 9 to June 30 was US$7.7 million ($10.5 million), exceeding the forecast of US$7.4 million by 3.2 per cent. This was due to higher net property income (NPI) and lower borrowing costs.

NPI was US$9.9 million, up 0.4 per cent from the US$9.8 million forecast, largely due to lower property expenses from various cost management initiatives including productivity improvements in labour management and energy expense savings through procurement and operating initiatives.

Gross revenue stood at US$28.8 million for the period, down 1.3 per cent from the US$29.2 million forecast.

Portfolio occupancy was 82.8 per cent for the reporting period, with an average daily rate of US$126.

Hyatt House hotels performed strongly during the reporting period, with occupancy at 87.2 per cent and revenue per available room (RevPAR) of US$123, exceeding forecasts by 1.6 per cent and 1.7 per cent respectively.

Meanwhile, Hyatt Place hotels had an occupancy of 80.9 per cent and RevPAR of US$96.

Hyatt House and Hyatt Place hotels posted gross operating profit margins of 44.5 per cent and 42 per cent respectively, which exceeded the forecasts by 0.5 per cent and 1.1 per cent.

As at June 30, ARA H-Trust had US$40.5 million in cash and cash equivalents, while its gearing was 31.9 per cent compared to 33.4 per cent at the IPO.

Its IPO prospectus presented the eight-month profit forecast for the period from May 1, 2019 to Dec 31, 2019. The forecast results for May 9 to June 30 were derived by pro-rating the May 1 to June 30 profit forecast accordingly.

In the IPO, gross proceeds of US$498 million were raised from the issuance of 565.9 million stapled securities, which included about 132.4 million stapled securities subscribed for by six cornerstone investors.

ARA US Hospitality Trust is a Singapore-based stapled group comprising ARA US Hospitality Property Trust (ARA H-Reit) and ARA US Hospitality Management Trust (ARA H-BT).

The stapled group is the first pure-play US upscale select-service hospitality trust to be listed on the Singapore bourse.

As at its May 9 listing date, the stapled group's initial portfolio is valued at US$719.5 million and comprises 38 hotels totalling 4,950 rooms. This includes 27 Hyatt Place hotels and 11 Hyatt House hotels, located across 21 states in the US. In addition, 36 out of the 38 properties have freehold land titles.

The counter was trading flat at 88.5 US cents as at 9.42am on Tuesday.

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