SGD New Issue Review – Ascendas Hospitality Trust 5Y 3.5%

ASCENDAS HOSPITALITY TRUST 5Y SGD – PX GUIDANCE @ 3.5%AREA

Issuer of A-HBT Notes:  Ascendas Hospitality Trust Management Pte. Ltd. (in its capacity as trustee-manager of Ascendas Hospitality Business Trust (A-HBT))
Issuer of A-HREIT Notes:      Ascendas Hospitality MTN Pte. Ltd.
Guarantor of A-HREIT Notes:   The Trust Company (Asia) Limited (in its capacity as trustee of Ascendas Hospitality Real Estate Investment Trust (A-HREIT))
Stapling:  Each Tranche of A-HBT Notes will be Stapled to aTranche of A-HREIT Notes immediately upon issue.
The A-HBT Issuer must not exercise any right or   option to purchase or redeem an A-HBT Note unless  the A-HREIT Issuer exercises a corresponding   right or option to purchase or, as the case may be, redeem an A-HREIT Note and vice versa.
Notwithstanding the above, each A-HBT Note and each A-HREIT Note are the obligations of the  A-HBT Issuer or, as the case may be, the A-HREIT   Issuer solely and not of the Issuers jointly, or  jointly and severally
Issue Rating: Unrated
Status:   Senior, unsecured
Issue Size:  TBD
Distribution: As per Information Memorandum, Singapore selling
restrictions under Sections  274/275 of SFA
Format/Docs:  Reg S Registered / Issuer’s SGD1billion Multicurrency Stapled Medium Term Note Programme
Price Guidance:  3.5% area
Tenor:  5-Year
Redemption for Taxation Reasons:  Yes, in accordance with the Programme
Redemption on Termination of A-HBT or A-HREIT:    In accordance with the Programme
Redemption upon Cessation or Suspension of Trading of the
Issuer’s Stapled Securities:  In accordance with the Programme
Mandatory Redemption of Notes upon Redemption of Relevant A-HBT Notes or, as the case may be, Relevant A-HREIT Notes or Un-Stapling of Stapled
Notes:  In accordance with the Programme
Denomination: SGD250K in aggregate in respect of one A-HBT Note and one A-HREIT Note
Governing Law: Singapore Law
Listing: SGX-ST
Clearing: CDP
Selling Restrictions: Sections 274 and/or 275 of the Singapore SFA
Timing:  As early as today’s business

ASCENDAS HOSPITALITY TRUST 5Y SGD

** NEW 5Y ANNOUNCED DRIVEN BY REVERSE INQUIRIES
** PRICE GUIDANCE AT 3.5% AREA
** AS EARLY AS TODAY’S BUSINESS

COMPARABLES
AREIT (A3) S$200m 4.0% 2022        104.10 / 3.32%
AREIT (A3) S$95m  2.5% 2019         99.40 / 2.65%
ARTSP (-)  S$100M 4.3% 2018        105.75 / 2.64%

Maiden issue from another Ascendas name which is a stapled trust and thus we have a stapled bond.

Ascendas Hospitality Trust is a stapled trust. The Trust comprises Ascendas Hospitality Real Estate Investment Trust and Ascendas Hospitality Business Trust established with the principal investment strategy of investing, directly or indirectly, in a diversified portfolio of income-producing real estate used predominantly for hospitality purposes located across Asia, Australia and NZ.

This is the same as the CDL Hospitality  Trust which is a stapled trust as well.

CDREIT issued a SGD 120 mio at 2.5% for 5 years in May 2013 and that bond hardly trades.

With 5 year interest rates at 2.085% today, we are getting a premium of 1.415% for 5 years and that is a decent pick up over the recent 5 year CDL that paid us 3%.  And 3.5% was exactly what we got from Cambridge Reit (BBB-) for 5 years last October.

The company pays a dividend of 7.12% that looks good to me given that its stock price is holding near its historic lows since its IPO in 2012.

AHREIT

There is little else to comment about the bond for its unrated status and the Ascendas name remains just as strong after the Temasek merger.