Far East Hospitality Trust, the hotel unit of Singapore’s biggest closely held developer, climbed in its trading debut after raising S$717.6 million ($573 million) in the city-state’s largest initial public offering this year.
The shares rose 2.2 percent to 95 Singapore cents at the close in Singapore. The hotel trust sold stapled securities at 93 cents apiece, the top end of its 86 cents to 93 cents price range, according to a prospectus filed with the Monetary Authority of Singapore this month.
Far East Hospitality’s advance exceeds gains among the 42 stocks on Singapore’s property index, while the city’s benchmark Straits Times Index declined 0.2 percent to the lowest in more than three weeks. The country’s hotel occupancy rates climbed to 86.4 percent last year, according to the Singapore Tourism Board, while visitor arrivals rose to a record 13.2 million.
“It’s a good proxy to the tourism and hotel industry in Singapore, where there aren’t too many options,” said Siew Ling Tan, Singapore-based analyst at CIMB Research Pte said. “The hotel business is still quite positive here.”
IPOs in Singapore have raised about $2 billion so far in 2012 compared with $7 billion in the first seven months of 2011, according to data compiled by Bloomberg. Ascendas Hospitality Trust started trading in the city last month after raising S$459 million.
Far East Hospitality’s placement tranche was 30 times oversubscribed, Gerald Lee, chief executive officer of the manager of the trust, said earlier this month.
A stapled security allows investors to purchase both a trust and a related company. The Far East Hospitality units comprise a real estate investment trust and a business trust, according to the listing prospectus.
Far East Hospitality will initially have 11 properties, among them seven hotels, including Albert Court Village Hotel and Orchard Parade Hotel, as well as four serviced residences, according to the offer document. Far East Hospitality forecasts a dividend yield of as much as 6.5 percent for 2012.
DBS Group Holdings Ltd., HSBC Holdings Plc and Goldman Sachs Group Inc. managed the IPO.