Ascendas Hospitality Trust AGM 2019

Nothing new for those who are updated with the results of AHT. 2018 is the transition for AHT to acquire the Japan properties in Osaka and Korea. Some notable tidbits from the presentations by the CEO:

• Financial cost effective interest rate drop to 2%
• NPI increase 3%
• NAV growth 11% 
• DPU increase 2.9%
• 14 out of 15 is freehold
• Average age of portfolio has drop form 23 to 18.
• Gearing 33%, no debt repayment till 2021 except for 2020.
• More diversify portfolio/income (1/3 in Australia, Japan, (Korea+Singapore))
• Australia continue to have headwind with new supplies but still healthy 85% occupancy with full booking during weekends.
• Japan continues to show strong growth (Olympic 2020, 2025 world expo, new Univeral Studio Japan attraction, IR planned for Osaka)
• Korean hotels has been doing quite well, MICE activities

Weirdly nothing is mentioned about Shama Luxe Aurora Melbourne Central that will be finished development soon.

The Merger
The merger is say to be good as the new entity under Ascott will be more diversified portfolio, with higher debt headroom for inorganic growth. The enlarge entity will have higher float and may be included in a index fund with attract institution to invest.The thing is Ascott has been issuing rights to enlarge its AUM for the past years and diluted the shareholders and decreasing DPU. With higher debt headroom, I worry.  Ascott hold 150 million perpetual securities, which mean it has a higher gearing than reported. Apparently not much people care about the merger, like 50% left before the Q&A started on the merger. Think most assume 99% will vote yes.

Q&A 
The Q&A this time is quite poor with silly questions. Thanks the board for their patient to explain and answer the questions posed to them. I decided not to post about the Q&A this time, as it is too much for inexperience me to write them out. There is too much to and fro discussion this time round and information overload. Some highlights are  

If there is a significant change in the NAV on Asccot or AHT side, will there be an adjustment to the Merger offer?
Apparently there is some room for adjstment but It doesnt matter to me as NAV will go up or down. How much can 1Q or 2Q  affect the NAV?

Can the offer units for 1 AHT share to Ascott share be adjusted so that shareholders will not ended up with odd lots? Can consider reducing the cash component so that shareholder can avoid the odd lots to have the share component rounded to 0.8 instead of 0.7942 shares?
The board will take consideration of the shareholders and discuss from the advisers if there is anything to do possible better without comprosimisng on the trasnaction.

One thing I can conclude from the AGM is don't ask the barber whether you need a haircut.

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A day at Funan Mall

Today I went to Funan to see see look look. The crowd is still heavy on the 2nd weekend of opening. It has a mix of different tenants, the basement and the outer tenants at the first stories are of F&B with a few at the different floors and the roof garden. Can see that management is trying to differentiate itself from raffles city.

I didnt plan to make a blog at first so did not take much photos of shop fronts.

 

First floor is a mix of different shops like UnderArmour, McDonald, Dyson. The entrance via the 2nd floor from the escalator bring you to Gong Cha and a Food alley. 3rd floor is the IT level with major player Best Denki and Courts, strangely no challenger. Other shops include some 3rd party shops selling laptops and IT gadget, dedicated Apple, Dell and Lenovo stores were spotted. And the DSLR camera shope are back namely Alan Photo and TK Foto. There is also a Bose and Audio Technica stores, game shops as well as a collectibles store. GV is at the 5th floor.

 

 

 

 

Took some shots on WeWorks

 

Afuri Ramen
Dinner time and F&B are packed. the queue to Afuri is crazy. 

Tatsu Japanese Soba Noodles
Strangely, the queue is short a Michelin Ramen outlet located right outside the main entrance. The waiter is a japanese, and so is the cook. Show how much effort the brand puts into. Onsen egg is watery unlike some other place which is half cooked. Gyoza is generously filled up, the melon tea is wonderful. Order a shouyu ramen but does not taste salty. There is a taste of medical herb and truffle due to the leek which is cooked in truffle.

Urban Farm/Sky Garden
Nothing much to say about the farm but the garden is pretty with a restaurant and a football school for kids and the amazing night view.

Tiong Bahru Bakery
Located at the 4th floor, I ordered an chocolate eclair that taste bitter and a cup of Lemon ginger mint tea, a challenge as I hate ginger.  when served it tasted mainly of mint. Never visit the orignal, so could not make a comparision but the pastry sure is expensive.

 

I definitely like the place. Most F&B are new that never heard before. Even Starbuck has to make way for a new coffee cafe. Will visit again some times. With Sim Lim closing down, this should be the next place to go for computers and cameras.

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Analysing the lost of Ascendas Hospitality Trust

This is the first equity I had blogged about and also my gem, being more than 24% of my Mum's income portfolio. In my eyes, Ascendas Hospitality Trust (AHT) is the only Hospitality S-Reit that is worth buying as others are plague with dropping DPU for years and yearly rights issue (The acquirer).

The market has adjust according to the offer. As AHT price gap up to $1.04 - $1.05, Ascott Reit (ART) price plunge to $1.27 -$1.28. From the table below, you can see that at $1.28, the value  from the scheme of arrangement is about the same that of AHT if I hold to the completion of the merger.

Table 1.AHT Dividend base on 2HFY2018

Yield
I do not own ART because I think it is not cheap, pro forma yield is 5.73% and the DPU has been dropping. I wonder if AHT properties can save their DPU. My aim is to acquire good Reit at 7% and premium Reit at near 6% yield. If you remember my first post on AHT, all other Hospitality S-Reit performed badly. So there is no reason for me to acquire ART at current price of $1.28 if I am not even acquiring off the market.

Base on current price of AHT and ART, the yield is 5.8% and 5.73% respectively. A slight drop in yield. In terms of yield, it may be similar, however in term of value I am not getting that. Simply put, it is as I have to force sell my AHT (which better than ART)  and  BUY ART at a high price.

Conclusion

Including fees, if I want to sell my shares now, from table 1, I would have a little more than $1300 less profits (if AHT DPU increase again and forgo the coming dividend)) or I can wait until I get the dividend. Going through the scheme also come with odd lots which some people dislike, some brokerage may not offer a easy way to offload them.

I will hold on to them for now till I have something to buy. It won't be easy getting a substitute currently. 

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