Ascendas Hospitality Trust

Ascendas Hospitality Trust caught my eyes for a long time as I like to own hotels in Japan to tap on Japan’s growing tourism. Especially so when they recently sold their 2 hotels in china.

Ascendas Hospitality Trust (AHT) is a hospitality Reit comprises of 11 9+1 hotels in Asia Pacific in Singapore, Australia, China and Japan. On November 2017, AHT announced an expansion of markets beyond Asia Pacific for potential investment. A quick look at the important metrics of AHT.

Ticker Code: Q1P

Sponsor: Ascendas-Singbridge Group. Jointly owned by Temasek and JTC.

NAV per share: 0.86 as at Dec 31 2017

Estimated NAV per share after china Divestment : 0.96 (Adjusted)

Gearing: 33.2%

Estimated gearing after repayment estimate to be: 23.6%

Price: 0.845 (09/03/2018)

PB after Divestment: 0.88

 Properties

Hotel Sunroute Osaka Namba

Australia	Japan	Singapore	China (DIVESTED)
Pullman Sydney Hyde Park	Hotel Sunroute Ariake and Oakwood Apartments Ariake Tokyo	Park Hotel Clarke Quay	Novotel Beijing Sanyuan
Novotel Sydney Central	Hotel Sunroute Osaka Namba		Ibis Beijing Sanyuan
Novotel Sydney Parramatta
Courtyard by Marriott Sydney-North Ryde
Pullman and Mercure Melbourne Albert Park
Pullman and Mercure Brisbane King George Square
Shama Luxe Aurora Melbourne Central (2H 2019)

                                                                                   

AHT announced on Jan 29 2018, that they will be selling their 2 hotels in china at 178% profit! 1156 million RMB is about S$240 million. Proceeds will used to repay debts, distribution and acquisitions.

Divestment of China Properties

                     

Performance

NAV has been growing with a CAGR of 9%. Net property income and DPS has been growing steadily. Future acquisition with cash from the divestment and a new service apartment to be completed in 2H2019 provide a good growth story.

If you take a look at other hospitality Reits such as FHT, CDLHT, FEHT and OUEHT, their DPU is dropping for years and are trading at near or above NAV. Do note that OUEHT has been receiving income support till 2017, not sure about the others. AHT is the only one with growing DPU.

Price Base on 10/3/2018

	AHT	CDLHT	FHT	FEHT	OUEHT
2013	7.53%	6.57%		8.83%
2014	6.3%	6.43%		7.38%	9.14%
2015	6.17%	6.21%	12.47%	6.59%	7.71%
2016	6.43%	5.85%	6.95%	6.13%	5.76%
2017	6.79%	5.74%	6.5%	5.66%	6.08%

DEBT                                        

 

Most debt is on fixed interest rate. Gearing will drop to 26.3% at an assumption of paying off S$160 million in debt.  Proceeds from  divestment should worth S$235.9 million, S$218.7 after fees. This give AHT headroom to take on more debt for future acquisitions. This leave us with S$58.7 million for a possible distribution of approximately special dividend of 0.05. However, most likely AHT will top up the shortfall of DPU from the absent of the China Properties.

Conclusion

At price to book of 0.88 after divestment on 31 March 2018, this Reit is fairly cheap in comparison of its performance against other hospitality Reits. Growth story of future acquisition from divestment proceed and its 9^th property to be complete in 2H2019. Possible estimated special dividend of 0.05.

Vested at 0.869.