Ascendas Hospitality Trust (A H Trust) is a stapled security listed on SGX with an investment focus on hospitality assets across key gateway cities in Asia. It was listed in 2012 and currently boasts a portfolio value of $1.63 billion as of 31 Mar 2018.
Judging by its relatively smaller market capitalisation, it may not be as well known as the big boys in the hospitality REIT sector such as the Ascott Residence Trust and CDL Hospitality Trust. Hence, in this article, I will share 7 key things to know about A H Trust before you invest.
Stock Quote: SGX:Q1P
Share Price: $0.795 (12 Jul 18)
Market Capitalisation: $890 million (12 Jul 18)
Industry: Hospitality REIT
As of 12 Jul 18, A H Trust portfolio consists of 10 hotels located in Australia, Japan, Singapore and South Korea.
The largest contributor is Australia, with 6 hotels in Sydney, Melbourne and Brisbane, that occupy about 41.8% of the entire portfolio.
Next is Japan, with 2 hotels in Osaka and Tokyo each. Japan takes up about 32.9% of the total assets.
Singapore, with its single hotel of Park Hotel Clarke Quay, occupies 19.5% of the total asset. This makes Park Hotel Clarke Quay the single most highly-valued property of A H Trust.
Lastly, South Korea constitutes 5.7% of the total assets.
Source: Investor Presentation, Jun 18
A H Trust’s sponsor is Ascendas-Singbridge Group, one of Asia’s leading sustainable urban development and business space provider with Assets Under Management of more than S$20 billion. It is jointly owned by Temasek Holdings and Jurong Town Corporation. It holds commercial, industrial and hospitality assets across 9 Asia countries such as China, Australia, India, Indonesia, and Japan.
Recent Divestment and Acquisitions
A H Trust has been rather active on the asset acquisition and divestment front lately, since it expanded its mandate in Nov 2017, to invest in global assets beyond Asia, Australia and New Zealand.
It announced the acquisition of KY Heritage Hotel Dongdaemun located at Seoul in Apr 2018, a freehold 4-star hotel with 215 rooms that was completed in 2015. The asset purchase is expected to improve income stability due to its master lease, and would be distribution accretive.
The acquisition would be funded by the capital raised from divestment of A H Trust’s two Beijing hotels that were 10-year old and on leasehold that expires in 2044. Essentially A H Trust has recycled its capital to enter a new, promising market.
Subsequently in June this year, A H Trust announced the addition of 3 new Osaka hotels into its portfolio, at a purchase price of $126 million. This is expected to be distribution accretive based on the pro forma statement, with FY17/18 distribution per unit would increase from 5.86c to 6.11c.
Source: A H Trust Annual Report
A H Trust has maintained stable financial performance in the past 5 Financial Year.
While its revenue has decreased slightly from $210 million to $203 million, its Net Income Available for Distribution actually improved from $54 million to $66 million over the 5 years.
Distribution per Unit has also increased from 5.51 cents to 5.86 cents in the latest FY.
With a borrowing of S$535 million and total assets of $1.73 billion, A H Trust’s gearing stands at 30.7% as at 31 Mar 2018. This is well below the regulatory requirement of maximum 45% gearing for REITs.
Its debt maturity profile is 2.7 years, with borrowing comprises of bank loans and Medium Term Note.
Source: A H Trust 4Q FY17/18 Earnings Report
In terms of Price to Net Asset Value, A H Trust is trading at 0.86 times of NAV, based on closing price of $0.795 on 12 Jul 18.
Its distribution yield is 7.4% based on the annual distribution of 5.86 cents. Do note that A H Trust’s distributions are paid out on a half-yearly basis.