M&L Hospitality Trust (IPO)
18-04-2012, 02:23 PM
(18-04-2012, 02:18 PM)steven Wrote: 12/04/2012 Prospectus This is just the prelim one. Pricing is still being finalized, I think. Post the link again once the final prospectus is out. Thanks.
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18-04-2012, 02:53 PM
Company Background
M&L Hospitality Trusts is a stapled group comprising a real estate investment trust, M&L REIT, and a business trust, M&L BT. M&L REIT is a hospitality REIT, with the principal investment strategy of investing in a portfolio of income-producing hospitality real estate or real estate-related assets in the Asia Pacific region Based on the book building price range of S$0.80 to S$0.87 per unit, the estimated yield for M&L Hospitality Trusts is 7.4% to 8.0% (FY2012 Annualised) and 7.7% to 8.3% (FY2013) The initial property portfolio of M&L Hospitality Trusts comprises the following hotels:- Hotel Locations Hotel Segment Ibis on Bencoolen Singapore Economy Ibis Novena Singapore Economy Four Points by Sheraton Sydney, Australia Mid-scale Swissotel Sydney Sydney, Australia Upper-scale Travelodge Docklands Melbourne, Australia Economy Hilton Nagoya Nagoya, Japan Upper-scale Competitive Strength 1. Diversified portfolio of quality cash-flow generating assets in key Asia Pacific markets, with 5 out of 6 hotels located in the world’s top 5 fastest growing hospitality markets (2010-2011 RevPAR growth for Sydney, Singapore and Melbourne is 17.6%, 11.8% and 8.3% respectively) Ø Hotels are all situated in prime areas within these cities Ø High barriers-to-entry markets underpinned by favorable supply / demand dynamics 2. Hotels managed by internationally renowned brands (Starwoods, Swissôtel, Ibis / Accor, Hilton International) 3. Stable cash flow from master leases and flexible capital structure with additional debt headroom for growth Issue Statistics Listing: The Main Board of the Singapore Stock Exchange Issue Size: 532,192,000 ordinary units Overallotment: 10% of the issue size or 53,219,000 units Price range: S$0.80 – 0.87 per unit Implied Yield (Ann.2012) 7.4% to 8.0% Estimated Yield (FY2013): 7.7% to 8.3% Offer size: S$426 – 463mm Free float: 55% (pre-overallotment) and 61% (post-overallotment) 
M&L REIT is a hospitality REIT, with the principal investment strategy of investing in a portfolio of income-producing hospitality real estate or real estate-related assets in the Asia Pacific region
i wonder what is the strategy for the kum family who just earlier bought these hotels?
18-04-2012, 09:46 PM
(18-04-2012, 02:53 PM)steven Wrote: Company Background P/B at $1.54 (using book value of $800+ million as seen in prelim prospectus and issue size as above). Listing price max at $0.87. Undervalued price. Why would an IPO list at undervalued price? Seems too good to be true. Am I missing out on something or did I calculate wrongly?
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18-04-2012, 10:18 PM
The shares issued in the offering is probably not the total number of shares outstanding. We can check again when the full prospectus is out.
18-04-2012, 10:23 PM
Exactly. Look at pg 83 of prelim prospectus - think the issue size refers only to units to be issued to public and institutional investors. Need to include the units issued to original owners also to get total units outstanding after IPO.
18-04-2012, 10:53 PM
(18-04-2012, 10:23 PM)swakoo Wrote: Exactly. Look at pg 83 of prelim prospectus - think the issue size refers only to units to be issued to public and institutional investors. Need to include the units issued to original owners also to get total units outstanding after IPO. Oh ya, that slipped my mind totally. Thanks!
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19-04-2012, 05:48 PM
(18-04-2012, 09:46 PM)FFNow Wrote: P/B at $1.54 (using book value of $800+ million as seen in prelim prospectus and issue size as above). Listing price max at $0.87. Undervalued price. Why would an IPO list at undervalued price? Seems too good to be true. Am I missing out on something or did I calculate wrongly? (18-04-2012, 10:23 PM)swakoo Wrote: Exactly. Look at pg 83 of prelim prospectus - think the issue size refers only to units to be issued to public and institutional investors. Need to include the units issued to original owners also to get total units outstanding after IPO. Issued shares is about 55% of the free float. The rest held by Kum's company. Gearing is 29.3%. NAV is around 84c. Yield at 8% is not bad to me but I am scared because there is no cornerstone investors. Anyone subscribing? Any views on this IPO?
17-05-2013, 09:43 PM
Corporate: Tycoons sell hotel assets as tourism boom fades; yield-hungry funds and trusts step in
By Michelle Teo 1640 words 22 Apr 2013 The Edge Singapore EDGESI English © 2013 The Edge Publishing Pte Ltd. All Rights Reserved. The tourism boom of the last few years might be reaching a plateau, but transactions of hotel properties are heating up. In the past month alone, at least two significant hotel property assets have been sold by local tycoons. “We’ve seen the highest spurt in rising capital values in hotels in the last two to three years, driven by record tourist arrivals, revpar [revenue per available room] growth and occupancy rates,” Donald Han, special adviser to the HSR property group, tells The Edge Singapore. “What has transpired this year, however, is a slowdown, and we don’t see that [growth in capital values]. As a result, a lot of owners are seeing an opportune time to sell.” In March, the mid-scale Ibis Novena, owned by former shipping executive Michael Kum, was sold to private equity fund Alpha Investment for $160 million, or $664,000 a room. Kum bought the 241-room property, which sits on freehold land on Irrawaddy Road, from Cockpit International in 2011 for $118 million, or just under $490,000 a room. He also bought the Ibis Bencoolen for $210 million, or $390,334 a room in 2010. The hotels were held under the Kum family’s Grand Line International, which was said to have been preparing to spin off the properties into a real estate investment trust (REIT) last year. On April 5, Park Hotel Group, which is controlled by Hong Kong billionaire Law Kar Po and run by his son Allen Law in Singapore, said it would sell Park Hotel Clarke Quay to Ascendas Hospitality Trust (A-HTrust) for $300 million, just below the $308 million valuation. Under the deal, the hotel will be leased back to Park Hotel Group to manage for 10 years, and the trust will earn a rental income comprising a fixed rent that increases 3% yearly and a variable rent based on earnings targets. The 336-room hotel opened in 2009 and was built on the site bought for just $55.5 million in 2006. The sale works out to $893,000 a room, or 19% higher than what some analysts believe to be a replacement cost of about $750,000. Park Hotel Group is also said to have put two other Singapore properties — Grand Park City Hall and Grand Park Orchard — up for sale. The company has not confirmed this, but analysts say the group expects the Orchard Road property, along with the adjoining Knightsbridge retail gallery, to fetch more than $1 billion, or more than $1 million a room. Upside potential? These prices are certainly rich, but they are not outlandish if one expects Singapore’s elevated rate of visitor arrivals to hold up in the years ahead. “The price tag [for Park Hotel Clarke Quay] seems fairly valued but may be a reflection of [A-HTrust] management’s optimistic outlook for the Singapore tourism sector,” says DBS Group analyst Derek Tan in an April 9 report on the transaction. He notes that there are several growth drivers over the longer term, and tourist arrivals are expected to grow 5.7% a year to reach 17 million by 2015. Moreover, some hotel assets have enhancement or redevelopment potential. Last October, the Hotel Grand Pacific on Victoria Street was sold to a group of private investors for $210 million, or $850,000 to $900,000 a room, despite its relatively downmarket profile. The hotel was owned by Sun Asia Pacific Corp, a company controlled by Paul Sun, who bought the hotel in the 1980s and is said to be a businessman who was active in property in the 1980s and 1990s. Tom Oakden, executive vice-president at Jones Lang LaSalle Hotels & Hospitality Group, says the hotel was not acquired for its strong operating cash flow or the yields it provides today but for its rebranding and repositioning potential. The freehold property sits in the heart of downtown Singapore and is a stone’s throw away from the Bugis and City Hall MRT stations. In such deals, private-equity funds and investors re likely to be looking to buy an underperforming property and “fix it up” before likely reselling it at a higher value. Meanwhile, in January 2011, the old Lion City Hotel and its adjoining Hollywood Theatre were sold for $313 million. Analysts put the valuation of the hotel in that deal at $813,000 a room. The vendor was the family of the late property magnate Wee Thiam Siew. The buyer, UOL Group, is now building a condominium and mall on the site. More transactions to come HSR’s Han says that while property owners were once valuing their assets “at tomorrow’s prices” on the assumption of continued robust performance in the tourism industry, they have since lowered their asking prices in the face of moderating growth expectations. That could well make it easier for deals to get done in the months ahead, he adds. “Owners have become more realistic and, to buyers, the values are now more reasonable than the high prices [that were quoted] up to last year.” That is not to say that prices of hotel properties will come down soon. On the contrary, the buyers and sellers of these assets might well come to terms at prices that are still above recent transactions, according to Oakden. “There is pent-up demand,” he says. According to some market watchers, hospitality REITs might have the upper hand versus private investors or private-equity funds when it comes to bidding for assets. Indeed, REITs have attracted strong interest from investors hunting for yield in the last couple of years. And, as the market value of their units climbed, they have become able to raise funds on more attractive terms to make acquisitions. “The REIT-type buyer would be able to price the asset more aggressively versus the private-equity buyer, for instance, which needs higher returns,” Oakden says, adding that, local REITs enjoy competitive advantages such as exemption on stamp duty on a property purchase. In the past year, at least two new hospitality REITs have been created and listed in the local market. There could well be more on the way, says HSR’s Han, which could broaden the pool of potential acquirers of assets. “The REITs are still hungry to buy. There will also be new REITs in the market, including regional ones that are looking to buy Singapore properties,” he says. Analysts call ‘hold’ on REITs On April 15, Far East Hospitality Trust’s manager said it was finalising the purchase of the Rendezvous Grand Hotel and the adjacent Rendezvous Gallery for $265 million from Straits Trading Co. Straits Trading is also joining forces with Far East Organization’s hotel arm, Far East Orchard, to form a hospitality management company. Straits Trading will sell its Rendezvous hotels in Perth and Melbourne in Australia to the joint-venture company. Both Straits Trading and Far East Orchard will also transfer their hospitality management business to the new set-up, which effectively allows Far East Orchard, with a 70% share, to expand its hospitality business outside Singapore. The Far East REIT, listed on SGX last August, is already Singapore’s largest hospitality portfolio by asset value. Aside from the Rendezvous properties, it has the right of first refusal to three hotels and four serviced residences. “[Far East] is still incubating more properties that are not yet in the REIT,” Han says. The group is also building three more hotels and two more serviced residences, one of which is in Kuala Lumpur. According to Han, investors are likely to prefer internationally branded hotels, which have well-known operators, as these properties are likely to perform better in a slowdown, and particularly as competition in the local hospitality sector heats up. About 11,000 new rooms are slated to become available in the next three years, Han notes, and he believes the better-known hotels would have an advantage in a highly competitive environment. For now, investors ought to pay close attention to whether acquisitions proposed by the local REITs are likely to be immediately yield-accretive. OCBC analyst Sarah Ong notes that Far East Hospitality Trust’s acquisition of the Rendezvous properties, had it been completed at the end of last year, would have raised the trust’s net asset value per stapled security to 98 cents, from 97 cents, and hiked the distribution per unit (DPU) to 2.12 cents, from 2.09 cents. Ong has a “hold” call on Far East Hospitality Trust, following a downgrade in December because of a more cautious tourism outlook. Her fair value of $1.05 is under review. DBS’s Tan says, however, that A-HTrust’s move to buy Park Hotel Clarke Quay could instead dilute its DPU by 4% to 6%, to 6.8 cents and 7.1 cents for FY2014 and FY2015 respectively, from 7.2 cents and 7.6 cents in previous estimates. This is based on the assumption that the trust will raise 67% of the acquisition value, or about $200 million, from equity. “The estimated initial yield of 4.8% is below its current portfolio yield, but we see potential opportunities to close that gap by further optimising the hotel’s performance through raising revpar,” Tan says in a report. He notes that Park Hotel Clarke Quay’s current revpar of $187 a night is lower than peer CDL Hospitality Trust’s average of $211 a night and the industry average of $223 a night. Nevertheless, the acquisition will diversify A-HTrust’s earnings base and increase the contribution from master leases to 30%. Tan has a “hold” recommendation on A-HTrust, with a price target of $1.03. The Edge Publishing Pte Ltd
07-06-2013, 07:29 AM
(This post was last modified: 07-06-2013, 07:29 AM by greengiraffe.)
Bad timing again....
M&L looking to launch new Reit Hotels-owning family feels it would help maintain company's pace of growth Published on Jun 07, 2013 • • 0 0 0 Purchase this article for republication Buy SPH photos M&L chairman Michael Kum and his daughter, Jocelyn, have their eye on a strong after-market performance. -- BT FILE PHOTO By Melissa Tan THE share market infatuation with real estate investment trusts (Reits) could lure the Kum family to spin off hotel assets from M&L Hospitality within months. The family is holding its cards close to its chest, but says launching a trust would help M&L keep growing at the same rapid pace it has set over the past five years, or even faster. Chairman Michael Kum told The Straits Times at the firm's Market Street office last week: "The market seems favourable. At times it's still a bit choppy, so we're watching very closely and if there's any slight improvement in the situation we will look into it. We hope (to list) as soon as we can, but there's no decision yet. If we need to, we'll move. And if we move, we'll move fast." Executive director Jocelyn Kum, 41, added: "We're just as mindful that the after-market performance needs to be strong." The family had planned to list a Reit called M&L Hospitality Trusts in May last year but abandoned the attempt last April, citing poor valuations. Mr Kum, 69, said last week that it would be "prudent" for M&L to watch upcoming Reit initial public offerings (IPOs) "carefully to make sure that they do well post-listing". Singapore Press Holdings and Overseas Union Enterprise will both list Reits in coming months. This is fast turning out to be a red-hot year for the Reit sector, thanks to the kick-start it received in March when an IPO for Mapletree Greater China Commercial Trust was nearly 30 times subscribed. That was swiftly followed by Croesus Retail Trust, which listed on May 10 and was 22.4 times subscribed. Croesus had planned to list last November but reportedly held back due to a weak market. Other possible Reits tipped to list here this year include an industrial trust by developer Soilbuild and some postponed from last year such as the Dynasty Reit. Ms Kum, who is Mr Kum's daughter and a former investment banker, told The Straits Times that a Reit would help the family grow its hotel business. The family's only hotel in Singapore, the 538-room Ibis on Bencoolen, accounts for nearly 30 per cent of its $1.4billion portfolio built up over the past five years. M&L mainly owns economy to mid-range hotels in Australia, New Zealand, London and Japan. The family goes for assets in "key gateway cities... in short, where Singapore Airlines will land", Mr Kum said. It may put all 12 of its hotels into the Reit even though some are "still maturing", Mr Kum said. This could make the new Reit much larger than the previously planned M&L Hospitality Trusts, which would have held six hotels. "There is plenty of cash in the coffers, so whether we list or not we'll continue to acquire. But there's always a limitation - it's our own money, so part of the reason for the intended listing is to grow the Reit and recycle a bit of capital, bring some money in and then grow the business." He added that M&L's immediate next step is to look for more assets. It already has a "fairly sizeable pipeline" in place, with two to four possible acquisitions in Australia and London. It is also looking at cities such as Hong Kong, Yangon, Seoul and Ho Chi Minh. None of its planned purchases so far are in Singapore. Mr Kum says Singapore hotel prices have been relatively high, meaning compressed yields. The Kums sold the 241-room Ibis Novena hotel for $150 million in March to property funds managed by Keppel Land unit Alpha Investment Partners. They bought it less than two years ago for $118million. melissat@sph.com.sg |
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