Tuesday, March 15, 2016

Recent Action - Ascott Reit

This will just be a short update to my latest portfolio additions.

This morning, I bought 10,000 shares of Ascott Reit at a price of $1.065.




This is following their recent placement exercise after announcing their recent latest acquisitions of property in New York for USD 158 million (SGD 218 million). The property acquired is the 369 unit Sheraton Tribeca New York Hotel located in Manhattan, with an occupancy of more than 90% in the previous year.

The acquisition is expected to be accretive and yield an EBITDA of 6.8%. Pro-forma DPU is also expected to increase from 7.99 cents to 8.11 cents following the placement exercise, which represents a 7.6% yield based on my entry price.

Readers of my blog would have remembered that I used to own this counter and managed to sell the same last year at $1.31 (link here). This represents a 23% discount based on my entry price this morning. Back then, the main reason why I decided to divest Ascott was because of it's aggressive expansion of their AUM towards their goal in 2020, while it means that there will be plenty of placement or rights exercise in the process of doing that. You can refer to my detailed explanation here.





Getting this back now doesn't mean they'll stop doing that. It just means that I am interested in their dividend yield which could stay in the meantime. Other risks pertaining to the hospitality industry such as competitive rev/par, short term duration stay, slowing economy and foreign exchange risk will remain, though Ascott is better than the rest in focusing on longer stay duration customers.

In summary, get this only if you are interested in the yield for income.


11 comments:

  1. Hi B,

    I tried for $1.065 too. But I could not get in.

    Cheers,
    Farmer.

    ReplyDelete
    Replies
    1. Hi PIF

      Ahh didn't know you were eyeing on it too to get in to get some yield ;)

      Delete
  2. Hi B,

    Welcome to the Ascott Club. I have been enjoying the DPU's you listed in the table. :)

    ReplyDelete
    Replies
    1. Hi Sanye

      You have been a loyal shareholders of Ascott :)

      Hope I can do the same too :)

      Delete
  3. You can get at $1.065 or lower after they XD 18 March w a dividend of $0.0155. Also the market may react after the Fed's statement on 15 Mar.

    ReplyDelete
    Replies
    1. Hi Siew Mun

      We'll never know until it happens ;)

      As it stands now, it is trading at $1.08 already, so no guarantee buying after ex-dividend is the best strategy.

      Delete
  4. Was the dilution of 6% in share base taken into account in working out the pro-forma dividend of 8.11c?
    Thanks

    ReplyDelete
    Replies
    1. Hi Wong

      Since the acquisition is accretive, I would assume that the dilution will be offset by the higher earnings, so the answer to that is yes, the pro-forma has taken into consideration all impacts.

      Delete
  5. Very impressive!! knowing when to get in and out of stocks is a great gift!

    ReplyDelete
    Replies
    1. Thanks Vivianne.

      If I could, I wouldn't want to trade so often.

      Delete
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