Accordia Golf Trust Buyout: Various Signs And Estimates

Some of things I found digging around show most likely the buyer is the parent company of Accordia Golf Trust (AGT).

Impairment of Good will

The Buyout came after 2 Quarters since the impairment of goodwill. The reason to impair othe goodwill is weird. I have no idea why they would do it after IPO for so long, reducing NAV, dustruption is common for their asset (reason can be read here) . Although it would no affect cash flow in any way.

Someone coming in to buy all your asset shortly after the NAV is lower? sound fishy and planned. NAV has reduced from 90 cents to 71 cents and now reevaluated at 76 cents probably due to the strong YEN.

Restructuring of Parent Company 

 Accordia Golf Co. Ltd (AGCL). It was announced on Nov 19 2019  that all shares of AGT is transferred from AGCL to a new entity call Accordia Next Co. Ltd. Then Nov 28 2019, came the announcement of the non-bidding buyout.

AGCL was bought by K.K. MBKP Resort back in 2017.

High Buyout price of Parent

According to AK of ASSI,  AGT Parent, AGCL was bought by K.K. MBKP Resort at 1.6x NAV. Why such a price? Looks high, wow 1.6x NAV. If you look at the chart of AGCL. It was offered close to market price, the share price did not move much after the offer was make. News of the offer was reported on Nov 30 2016.

1.6x NAV as offer price for AGT? need to be realistic here.

Offer Price

We can speculate that the buyer do not want to pay at 90 cents a share resulting in the impairment. If we give a conservative small premium over NAV of 5%, the offer price will be 80 cents. If they decided to throw in the 3rd quarter dividend then a offer price of 82 cents is possible.

The highest yield in Japan REIT is 5.5%, a hotel REIT and as low as 2.7%, a office REIT. The TTM DPU for AGT is of 4.7 cents. At 82 cents the yield will be 5.7%.  A good enough deal for the parent.

Once the deposit of membership is fully paid out in 8 - 9 years. There will be a boost in DPU. A future catalyst of AGT.

AK post about aprice offer of $1.20. We can dream but that will give a yield of only 3.9%. Will they pay for such a yield? 

Croesus Retail Trust

Croesus Retial Trust was bought out and delisted in 2017 with a 1.1x  NAV and a yield of 6.7%. Japan Reit highest yield was 5.5%, retail REIT are even lower. Aeon REIT is currently at 4% yield. Great deal for the buyer, not so great for the shareholder. losing out a great REIT and a great yield, I had a yield on cost of more than 8%

Remeber, Shareholder is always at the losing end. Think Challenger.

Other interesting finds

AGCL has been sitting on its butt doing nothing since 2011 and IPO AGT in 2014.
Source: http://www.accordiagolf.co.jp/english/company_info/history.php

Analyst of AGT is hard to find. You may be interest to read.
https://www.smartkarma.com/home/daily-briefs/brief-singapore-accordia-golf-trust-agt-sp-privatization-likely-at-min-0-76-sgd-unit-leaves-another-13-upside-and-more/

Conclusion

High chance of a deal. 80- 82 cents is conservative and reasonable. Of course, a 1.1x NAV offer price would be even better.