CapitaLand Ascott Trust - Maybank Research 2024-10-03: Adding lyf To Portfolio

• CapitaLand Ascott Trust is acquiring hotel-licensed lyf Funan Singapore for S$263m, or an attractive S$800k per key. The deal offers DPU accretion of 1.5%, assuming 50% of management fees in units.

Riding on the communal living wave

• - Read this at SGinvestors.io -
• Lyf Funan has multiple room types to cater to a variety of demand. Located near universities, offices and the civic district, there is no lack of communal living options in lyf Funan’s submarket. Nonetheless, amenities and retail options at Funan shopping mall complement its offerings.
• Management guided for year-to-date average daily rate (ADR) to be stable around S$200, while benefitting from events such as Formula 1. Year-to-date occupancy is above 80%.
• - Read this at SGinvestors.io -

Master lease with variable arrangements

• Lyf Funan is on a master lease, with rent payable structured at 93.5% of gross operating profit. In the case of negative gross operating profit, there will be no rental income. Gross operating profit margin is estimated at 60-65%.
• While there is no downside protection, management is confident in the asset’s upside, driven by the popular communal living concept. The agreed property value is at a 1.9% discount relative to independent valuations, reflecting its leasehold tenure (54 years remaining).
• In the long run, there is opportunity to top up the lease and redevelop the entire project together with its sponsor.

Funded by divestment proceeds & debt

• Read more at SGinvestors.io.

Li Jialin Maybank Research | https://www.maybank.com/ 2024-10-03 SGinvestors.io

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