In Property, Reits, Uncategorized on 06/08/2012 at 6:30 am
Here I prophesised that Far East Reit would be forced to increase the expected yield on its trust from a niggardly 6-6.5%.
Well Morocco Mole (sidekick to Secret Squirrel) tells me that the Reit, which owns hotels and serviced residences in Singapore has not changed its pricing, despite CDL’s yield of 6ish% and Ascendas Hos of almost 8%.
So don’t subscribe if you are hoping for a pop in the price on listing day. CDL looks a better yield play. Got public track record.
Related post: https://atans1.wordpress.com/2012/07/30/ascendas-hospitality-trust-surprises/
In Property, Reits on 30/07/2012 at 6:31 am
Ascendas Hospitality Trust (A-HTrust) closed at its issue price last Friday. Considering that the public offer was about 6.9 times subscribed and yields projected at 7.9% (FY13) and 8.0% (FY14), while CDL’s is 6% (admittedly that is trailing) and strong demand for the placement, I expected the securities to close higher.
Maybe it’s the structure? The A-HTrust is a ‘stapled security’ comprising the Ascendas Hospitality Business Trust (80%) and the Ascendas Hospitality Real Estate Investment Trust (20%).
Mr Tan Juay Hiang, chief executive, Ascendas Hospitality Trust, said earlier last week: “The REIT structure does allow unit holders and investors to enjoy a more tax efficient structure. And the business trust will allow the platform to look at the potential development projects, unlike the REIT there is a limitation. So on a staple securities basis, it does provide quite a fair bit of benefits for unit holders and investors.”
Maybe it’s because the trust said it’s looking at acquisitions to grow the value of its assets going forward. Rights issueS, more debt?
Maybe because as analysts said there are downside risks to hospitality trusts as the tourism market is highly sensitive to global downturns. Projections could go wrong.
Maybe it shouldn’t have allotted an additional 73.4 million securities to the placement tranche of its initial public offering in Singapore as part of its overallotment process?
Update on 31 July: Another reason could be that the assets are outside S’pore and investors place a premium on S’pore based assets. The reverse of the govt’s “FTs are betterest” policy.
Anyway, means the coming Far East Reit got to redo its sums again about being cheapskate https://atans1.wordpress.com/2012/07/24/far-east-reit-cheapskate/
Keep an eye on A-HTrust. Could be worth adding to portfolio for yield and capital appreciation. I like the combi of biz trust and Reit, though not sure if it will work in practice. Got to research the issue.