Wednesday, October 23, 2013

M&L Mulls Sydney Listing After Scrapping 2012 Singapore IPO

ML Hospitality Trusts, the owner of
Australia’s biggest hotel, may seek a listing in the country

after abandoning its initial stock sale in Singapore last year.


The trust, with $1 billion of hotels in five nations, may

add more properties before its next listing attempt, said

Michael Kum, the chairman of the Singapore-based ML. The owner

of the Four Points by Sheraton overlooking Sydney’s Darling

Harbour dropped plans to raise as much as S$463 million ($373

million) in April 2012 because demand was weaker than targeted,

two people with knowledge of the matter said at the time.


“Whenever the market recovers, we’ll look at a listing

seriously, whether it’s Australia or Singapore,” Kum said in an

interview in Singapore yesterday. “We’ll continue to look at

Australia, at Brisbane, Perth” for acquisitions, he said of the

state capitals of Queensland and Western Australia.


Capital values of hotels in Australian city centers are

expected to rise 2.7 percent over the next two years, the

strongest growth of any commercial property asset class,

according to a second-quarter survey of real estate

professionals by National Australia Bank Ltd.


Companies have raised $4.8 billion through initial public

offerings in Singapore in the past year, with REITs and business

trusts accounting for the majority of fundraising, according to

data compiled by Bloomberg. In Australia, they raised $2

billion, the data show.


Most Rooms


Kum declined to give more details on the next listing

attempt. ML owns two hotels each in Melbourne and Sydney, where

its 683-room Four Points was cited by the New South Wales state

government as the biggest in the country. The property, along

with assets including Japan’s Hilton Nagoya, the Swissotel in

Sydney and the Ibis in Singapore, were among the hotels in the

earlier share sale in the city-state.


ML last week said it had received government approval to

expand its Sydney Four Points by adding a third tower and 230

rooms. The company is also spending about A$6 million ($5.8

million) to upgrade its Citigate Hotel in Melbourne from an

“economy” to a “mid-scale” property, Kum said.


In addition to Australia, ML owns four hotels in Japan,

one in Singapore, one in New Zealand and two in London.


The decision to consider the Australian stock market also

came after the Singapore benchmark Straits Times Index (FSSTI) posted

the smallest gain among the world’s developed markets. The

Australian benchmark stock gauge has climbed 15 percent this

year, compared with the Straits Times Index’s 1.2 percent

advance, according to data compiled by Bloomberg.


Good Time


The Singapore dollar has increased 1.5 percent this year

against the U.S. currency, while the Australian dollar fell 7.4

percent, the most among developed markets.


“In the case of Singapore and Australia, both are quite

developed markets, so the risk capital is not going to diverge

that much,” said Alan Richardson, a Hong Kong-based money

manager at Samsung Asset Management Ltd. “This is a good time

for opportunistically listing REITs right now because the risk-free rates have peaked over the next three to six months, so

there is this window of opportunity.”


ML is also considering the stock offering as hotel-property sales increased. Asia-Pacific hotel sales more than

doubled to $2.8 billion in the third quarter, with Australia,

Singapore and Japan accounting for 83 percent of the

investments, property broker Savills Plc said in a report on

Oct. 7. Hotel sales will rise about 30 percent in the fourth

quarter, it added.


The SP/ASX 200 A-REIT Index that tracks property trusts in

Australia trades at a 5.4 percent yield, while a similar gauge

of REITs in Singapore offers 4.8 percent. Still, the valuations

are higher in Australia, where the REIT index trades at 18 times

earnings, or twice the multiple for Singapore.


“Wherever there’s good opportunity, that’s where we go,”

Kum said.


To contact the reporters on this story:

Nichola Saminather in Sydney at

nsaminather1@bloomberg.net;

Pooja Thakur in Singapore at

pthakur@bloomberg.net


To contact the editor responsible for this story:

Andreea Papuc at

apapuc1@bloomberg.net



M&L Mulls Sydney Listing After Scrapping 2012 Singapore IPO

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