Ascott Residence Trust - CGS-CIMB Research 2022-08-16: Building A Defensible Portfolio

Ascott Residence Trust - Building A Defensible Portfolio

  • Ascott Residence Trust announced the acquisition of 3 serviced residences in Australia, France and Vietnam, five rental housing assets in Japan and an additional 45% stake in South Carolina student accommodation, Standard at Columbia, for a total purchase consideration of S$215.2m on 15 Aug 22, which is the capitalised asset value minus debt.
  • The agreed property value of S$318.3m represents a 2.2% discount from the appraised value and will increase Ascott Residence Trust's AUM from S$7.7bn as at 31 Dec 21 by 7.8% to S$8.3bn. EBITDA yield for the assets in FY21 ranged from 3.2% to 6.5%. Based on the management’s loan-to-value assumption of 54%, the proposed acquisitions will lift FY21 DPU by 2.8% on a proforma basis.
  • Ascott Residence Trust raised S$170m via the private placement of 118.9m units at S$1.12 per unit on 15 Aug 22 to partially fund the acquisition. The management indicated that S$45.3m or 26.6% of the S$170m raised will be earmarked for future potential acquisitions.
  • In lieu of the private placement, Ascott Residence Trust management estimates advanced distribution for 1 Jul-23 Aug 22 to be S$0.01002-S$0.01102, which is expected to be paid on or around 18 Oct 22.
  • The proposed acquisition is subject to shareholder approval at an EGM slated for 9 Sep 22.
  • About 92% of the acquisition portfolio’s gross income is from stable sources stemming from the extended-stay assets - 5 Japan rental housing assets and the US student accommodation asset which have average length of stays of two years and one year respectively - and the master-leased SRs in France and Australia. This increases Ascott Residence Trust’s stable income from 69% to 71% of gross profit and long-stay AUM from 17% to 19% pre-vs post-acquisition
  • Our DDM-based target price for Ascott Residence Trust increases from S$1.24 to S$1.25 after we factor in FY22F- 24F dividend accretion of 1.1-5.9% from the proposed acquisition.

Above is the excerpt from research report by CGS-CIMB.
Clients of CGS-CIMB may access the full report in PDF @

LOCK Mun Yee CGS-CIMB Research | 2022-08-16

Read also CGS-CIMB's most recent report:
2022-10-31 CapitaLand Ascott Trust - More Recovery And Portfolio Reconstitution.

Previous report by CGS-CIMB:
2022-10-07 CapitaLand Ascott Trust - Recovery & Inorganic Growth Ahead.

Price targets by 3 other brokers at CapitaLand Ascott Trust Target Prices.
Listing of research reports at CapitaLand Ascott Trust Analyst Reports.

Relevant links:
CapitaLand Ascott Trust Share Price History,
CapitaLand Ascott Trust Announcements,
CapitaLand Ascott Trust Dividends & Corporate Actions,
CapitaLand Ascott Trust News Articles

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