Ascendas Hospitaly Trust: The Buying Spree Has Began

View From Y-Heritage Hotel Dongdaemun

I have been eagerly waiting for Ascendas Hospitaly Trust (AHT) to make their acquisition since their divestment of their china properties. Today, AHT announced that they are buying a hotel in Korea.

AHT is buying Y-Heritage Hotel Dongdaemun at a discount of 3.2% to the hotel's valuation, paying S$89 Million fully funded by debt. The selling of the 2 china properties translate to a net property income (NPI) yield of 3.3% while this acquisition provide a net property income yield of 4.1%

AHT highlighted that the acquisition is expected to be accretive. Assuming AHT had owned the hotel since April 1, 2016, on a pro forma basis, the distribution per stapled security for FY2016/17 would have edged up from 5.68 Singapore cents to 5.69 cents

DPU contributioned by 2 china properties : 1.77 cents provide a value of S$218.7 Million after expenses upon divestment.

DPU to be contributioned by Y-Heritage Hotel Dongdaemun : 1 cents at a cost of $89 Million by debt.

Although that the acquisition only increase a miserable 1 cents. We can see that the cost for that 1 cent DPU is lower. Base on AHT total property value as at mar 2016 is S$1624 Million, a S$89 Million debt is equal to 5.48% in gearing. Hence gearing will be increased from 33.2% to 38.7%.

The sale of China properties are estimated to be completed in 1H 2018/2019. Looking forward to more acquisitions ahead.

Y-Heritage Hotel Dongdaemun