About ARA US Hospitality Trust
1. What is ARA US Hospitality Trust?
ARA US Hospitality Trust is the first pure-play U.S. upscale select-service hospitality stapled group, comprising ARA H-REIT, a real estate investment trust and ARA H-BT, a business trust. It was listed on the Mainboard of the Singapore Exchange on 9 May 2019.
2. What is ARA US Hospitality Trust's investment mandate?
ARA US Hospitality Trust is established with the principal investment strategy of investing, directly or indirectly, in income-producing real estate assets used primarily for hospitality purposes in the United States.
3. Who are the Managers and Sponsor of ARA US Hospitality Trust?
The Manager of ARA H-REIT is ARA Trust Management (USH) Pte. Ltd. The Trustee-Manager of ARA H-BT is ARA Business Trust Management (USH) Pte. Ltd.
The Sponsor is an indirect wholly-owned subsidiary of ARA Asset Management Limited ("ARA"). ARA is a premier global integrated real assets fund manager headquartered in Singapore. As at 31 December 2018, the gross assets managed by ARA Group and its associates is approximately S$80.1 billion1 across 100 cities in 23 countries.
4. What are the restrictions on the ownership of ARA US Hospitality Trust stapled securities?
To qualify for favorable tax treatment under the U.S. Portfolio Interest Exemption rule, all Stapled Securityholders are prohibited from directly or indirectly owning in excess of 9.8% of outstanding Stapled Securities in ARA US Hospitality Trust, subject to any increase or waiver pursuant to the terms of ARA US Hospitality Trust's Trust Deed and on the written recommendation of the Managers.
5. Why should I invest in ARA US Hospitality Trust?
The Managers believe that ARA US Hospitality Trust offers:
- A quality and geographically-diversified Initial Portfolio of upscale select-service hotels
- First pure-play U.S. upscale select-service hospitality portfolio listed on SGX-ST with superior operating performance
- Premier hotel branding (Hyatt branding) with well-established and experienced hotel operator
- Committed and reputable Sponsor with strong network and branding
- Stable distributions backed by prudent capital structure, with an attractive distribution yield
6. What are the Managers' management fees payable by ARA US Hospitality Trust?
The Managers' management fees comprise of base fees and performance fees.
Base Fee: 10.0% per annum of the Distributable Income of ARA US Hospitality Trust
(calculated before accounting for base fee and performance fee).
Performance Fee: 25.0% of the increase in distribution per Stapled Security ("DPS") in a financial year over the DPS in the preceding financial year (calculated before accounting for performance fee but after accounting for base fee) multiplied by the weighted average number of Stapled Securities in issue for such financial period. The performance fee is payable if the DPS in any financial period exceeds the DPS in the preceding financial period. For each of Forecast Period 2019 and Projection Year 2020, the difference in DPS shall be the difference in actual DPS in such financial year with the projected DPS.
7. How do you efficiently manage the portfolio of US assets from Singapore?
The Managers are well supported by a team of real estate and investment professionals including the Chief Executive Officer (Mr Lee Jin Yong), Head of Investment (Mr James S Jung) and the Head of Asset Management (Ms Lisa Swain) who are based in the United States. The hotels will also be managed by our Hotel Manager, Aimbridge, the largest independent hotel management company in the U.S. It manages over 800 hotels throughout the U.S. and Caribbean. The Finance Director (Mr Ling Hong Liang) will be based in Singapore.
Investing In ARA US Hospitality Trust
1. What are the stock symbols of ARA US Hospitality Trust?
SGX Counter Code: XZL
Bloomberg: ARAUS SP
2. Are distributions (including return of capital) by ARA US Hospitality Trust to Stapled Securityholders taxed in Singapore?
Stapled Securityholders will not be subject to Singapore income tax for ARA H-REIT's distributions made out of taxable income, tax exempt income, return of capital and ARA H-BT's distributions. The Inland Revenue of Singapore does not impose any tax on capital gains. Any gains on disposal of the Stapled securities are not liable to tax provided the Stapled securities are not held as trading assets.
3. Can I invest in ARA US Hospitality Trust with funds from my Supplementary Retirement Scheme (SRS) or Central Provident Fund (CPF)?
You can invest in ARA US Hospitality Trust with funds from your SRS account through DBS, OCBC and UOB. ARA US Hospitality Trust is currently not included under the CPF Investment Scheme.
4. What is the distribution policy of ARA US Hospitality Trust?
The distribution policy is to distribute 100% of ARA Hospitality Trust's Distributable Income for Forecast Period 2019 and Projection Year 2020, and at least 90% thereafter.
The distributions will be made on a semi-annual basis. The first distribution, which will be in respect of the period from the Listing Date (9 May 2019) to 31 December 2019, will be paid by the Managers on or before 31 March 2020.
5. Do Stapled Securityholders have to submit W-8BEN or W-9 Forms?
No, Stapled Securityholders will not be required to submit W-8BEN or W-9 Forms based on existing laws and regulations for Portfolio Interest Exemption purposes.
6. What is the distribution currency of ARA US Hospitality Trust?
The distributions will be declared in U.S. dollar.
However, each Stapled Securityholder will receive the distribution in the Singapore dollar equivalent of the U.S. dollar distribution declared, unless the Stapled Securityholder elects to receive the relevant distribution in USD.
7. Do I need a USD bank account if I elect to receive my dividend in USD?
If you elect to receive your distributions in U.S. dollar, the payment will be made out in cheque (and mailed to your address registered with CDP). For cheques deposited into a Singapore dollar account, distributions will be converted from the U.S. dollar equivalent based on bank's exchange rate.
1. How did the US hospitality sector fare in general?
Since 2010, the US lodging market has benefited from substantial improvement in operating performance, registering nine consecutive years of RevPAR growth as of 20182.
2. What is the select-service hotel segment?
A select-service hotel typically offers limited meeting space, modified recreational and retail amenities, and a limited food and beverage offering. ARA US Hospitality Trust's initial portfolio comprises 38 upscale select-service hotels.
3. How big is the US hospitality sector ?
According to STR, the US features the largest lodging market in the world with 5.3 million rooms, accounting for approximately 30% of global hotel rooms inventory as of December 20182.
- Includes assets under management by ARA Asset Management Limited and the Group of companies ("ARA Group") and its Associates and Joint Ventures as at 31 December 2018
- JLL Independent Market Research Report commissioned for the listing