Developer Cheung Kong to meet potential investors in hotel listing

PUBLISHED : Saturday, 17 November, 2012, 12:00am
UPDATED : Saturday, 17 November, 2012, 4:13am

Cheung Kong (Holdings) will start its first round of meetings with prospective investors on Monday for the proposed listing of its extended-stay hotel business that aims to raise about US$800 million.

The listing application was approved on Thursday and the offering may be launched next month, according to sources.

The amount to be raised could range from US$500 million to US$800 million, depending on the prevailing market environment.

Extended-stay hotels typically offer suites that are larger than hotel rooms and facilities such as kitchens.

Cheung Kong, the city's second largest developer in terms of market share, had earlier said it proposed to separately list the extended-stay hotels business by way of a listing of stapled securities on the main board of the Hong Kong exchange.

A stapled security is a financial product comprising two or more securities, such as a share in a corporation and a unit in a unit trust, which are contractually bound together and cannot be traded separately.

On October 11, the trustee-manager of Horizon Hospitality Investments and Horizon Hospitality (Holdings), which will own the extended-stay hotels arm, submitted a listing application to the exchange.

Horizon Hospitality (Holdings) will own four hotels - two in Kowloon and two in the New Territories - which together will have 4,833 suites with a total gross rental area of 3.32 million square feet.

Given the going rate of about HK$7,000-HK$8,000 per square foot, the estimated value of the hotels would be HK$26.6 billion, according to a research report by KGI Asia last month.

Each stapled security would comprise a unit of Horizon Hospitality Investments, a preference share in Horizon Hospitality (Holdings) and an interest in ordinary shares of Horizon Hospitality (Holdings) held by the trustee manager.

Horizon Hospitality Investments is a fixed single investment trust that will only invest in securities and other interests in a single entity - Horizon Hospitality (Holdings).

Bank of America Merrill Lynch, DBS and Standard Chartered are handling the offering, which will be the second listed stapled security besides HKT Trust and HKT.