has entered into a memorandum of understanding (MOU) with the sponsor to acquire three lodging assets in London (230-unit The Cavendish London on management contract with minimum guaranteed income, MCMGI), Dublin (136 -unit Temple Bar Hotel on MCMGI) and Jakarta (185-unit Ascott Kuningan Jakarta on management contract, MC), including asset enhancement initiatives (AEI) at The Cavendish London and Temple Bar Hotel;
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will embark on equity fund raising (EFR) to raise no less than S$300m.
Acquisition likely to be DPU neutral in FY23F due to time lag between EFR and completion of acquisition in 4Q23F
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Total purchase consideration of S$373.3m is based on the net asset value of the assets, which takes into account the aggregate property valuation of S$530.8m, and will be 46.5% (or S$173.5m) funded by proceeds from the announced EFR, 14.0% from proceeds from the EFR in Aug 22, 2.1% from divestment proceeds and 8.0%/16.8% funded in 4Q24F/4Q25F upon completion of AEI at The Temple Bar Hotel/Cavendish London, the company said.
EBITDA yield of the proposed acquisition is 5.1%/6.5% pre-/post-AEI of The Cavendish London on a FY22 pro forma basis, according to the management. The acquisition price represents a 1.8% discount to the latest valuation of S$530.8m, as valued by independent valuers, HVS and Cushman & Wakefield, on 30 Jun 23.
We expect the acquisition to be DPU neutral for CapitaLand Ascott Trust at +0.2% in FY23F given the time lag between the EFR and the completion of acquisitions, and +1.1% accretive in FY24F.
Reiterate ADD with higher DDM-based target price of S$1.32
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Above is the excerpt from research report by CGS-CIMB. Clients of CGS-CIMB may access the full report in PDF @ https://www.itradecimb.com.sg/.
