Towards Financial Freedom
DBS Equity Research - Wired Daily 15 Mar 2016
Ascott Residence Trust - Acquires second hotel in New York for S$218m. Maintain BUY call with TP of S$1.33
Ascott Residence Trust(ART) announced the acquisition of 369-room Sheraton Tribeca New York Hotel for US$158m (S$218m). This is ART's second property in the US following the acquisition of Element New York Times Square West last year. The acquisition price represents a 5% discount to the independent valuation of US$166m (S$229.1m) and implies a valuation of US$428,000/key which is below recent transactions of between US$500,000-600,000/key. The acquisition will be financed through 1) S$100m equity placement: 94.787m units at S$1.055 per unit (6.7% discount to last closing price of S$1.13) and 2) US$100m five year onshore debt with an interest cost of between 3-3.4%. With a DPU accretive acquisition which further enhances ART's exposure to the growing New York market, we maintain our BUY call with TP of S$1.33. We also like ART for its attractive valuations. At current level, ART offers a 7.4% yield and trades at 0.8x P/Bk.
Keppel Land has proposed to undertake a selective capital reduction exercise to cancel all the remaining 0.73% shares currently not owned by Keppel Corp. The participating shareholders will receive S$4.24 for each share cancelled, same as the offer price in Keppel Land's privatisation deal last year. The proposal is subject to approval of at least 75% of all shares voted by shareholders present and voting at the upcoming EGM and Court Approval. The deal is immaterial to Keppel Corp. Total consideration for the exercise is estimated to be around S$48m, representing <0.5% of Keppel Corp's NTA. We believe one of the main reasons for the exercise is to allow the participating shareholders to realise the value of their investment in the privatised Keppel Land.
Tat Hong Holdingsannounced that it has been approached in connection with a potential transaction which may or may not lead to an acquisition of the issued share capital of the company. Discussions are preliminary.
Source: DBS
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