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Ascott Residence Trust:
Proposed acquisitions in Australia and Japan
- Ascott Residence Trust (ART) announced its proposal to acquire three serviced residences and four rental housing properties in Australia and Japan from its sponsor Ascott Limited for a total purchase consideration of S$246m.
- This translates into an EBITDA yield of 5.1%.
- On a pro forma basis, the acquisitions are expected to raise ART’s FY14 distribution income by S$3.9m and DPU by 2.9%.
- ART intends to fund the acquisitions with a combination of debt financing and the issuance of perpetual securities.
- We are positive on the acquisitions as the transactions are expected to be DPU accretive and would enhance ART’s geographical diversification and penetration into growing markets.
- As these are interested person transactions, ART would need to obtain unitholders’ approval at an EGM. We thus maintain our BUY rating and S$1.44 fair value estimate for now.
(Wong Teck Ching Andy)
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