Extracted from DMG Daily.

Singapore's Ascott unit to buy property in India for S$15.42m

BT, Published March 14, 2007

ART's ATM offering of 8m units fully subscribed

ASCOTT Residence Trust (ART), which is selling 105.3 million new units to raise $199 million, yesterday said that the ATM offering of 8 million units at $1.90 per unit was fully subscribed by retail investors yesterday. The news follows Monday's announcement that the 47.3 million new units offered to institutional and other investors on that day were more than 15 times subscribed. Another 49.9 million units are being offered to existing stockholders at $1.88 apiece. The stock offered to existing stakeholders is based on one new share for every 10 they own, ART said.

ART is raising the $199 million to finance the acquisition of five properties in Australia, Japan, the Philippines and Vietnam.

'We are pleased that the ATM offering of 8 million new units was fully taken up, as this demonstrates that retail investors have endorsed our latest acquisitions and equity fund raising exercise,' said Chong Kee Hiong, chief executive of the trust's management team. 'ART will continue to pursue its proven acquisition strategy of acquiring yield-accretive assets in the pan-Asian region to achieve our target portfolio value of about $2 billion by end-2008.'

ART owns some of the properties managed by The Ascott Group, which is the biggest operator of serviced residences in Asia and Europe. Ascott is also expanding to increase the number of apartment units to 25,000 by 2010, from more than 19,000 at present.

Once the acquisitions and the fund raising are complete, unitholders of ART can expect a higher annualised distribution per unit (DPU) of 7.28 cents in 2007. This is an 11.5 per cent increase over the annualised forecast DPU of 6.53 cents in 2007 for the 14 properties in ART's portfolio before the acquisition.

ART's shares closed 8 cents down at $2.00 yesterday. The new units are expected to begin trading on March 26.

9-Feb-2007

Equity Raising

Equity fund raising. ART has proposed to raise gross proceeds of S$199m to part finance a target acquisition of five properties. Certain part of the proceeds will also be used to re-finance loans drawn for the acquisition of a 26.8% effective interest in the Vietnam Target Property, which was completed in Jan 2007 as well as other general corporate and working capital purposes. With the completion of the equity fund raising, the trust’s annualised 2007 forecast DPU will rise from 6.53 cents to 7.14 cents, an increase of 9.4%.

Maintain Buy with target price of S$2.20. As ART is the only pan-Asian serviced apartment trust, there’s little competition in acquiring properties to enhance their portfolio. We have revised our 2007 DPU estimates upwards from 5.2 cents to 6.7 cents due to lower provision of income tax from 18% to 15%. Projected MI is also reduced following management’s guidance in the latest circular. We expect earnings to continue to grow given the management’s plan to achieve property portfolio of S$2b by 2008. We maintain our fair value of S$2.20, backed by our DCF calculations. Maintain Buy.

Extracts fm OCBC Report dated 26-Oct-06,

Valuation upgrade on favourable outlook

Decent showing. Ascott Residence Trust (ART) reported a decent set of results for the period from 31 Mar to 30 Sep 2006. Revenue came in at S$52.3m, 1% lower than its own forecast, but distributable income of S$14.3m was 2% higher than forecast. Distributable income per unit (DPU) of 3.14 cents was 2% higher than its forecast. Singapore and Philippines were the star performers, but this was dragged down by China which reported lower than expected revenue and gross profit due to the expiry of leases from key accounts.

Bought Tianjin and Roppongi. In the last quarter, ART made 2 acquisitions, a 90% stake in a 30-storey mixed development with 172 service apartments in Tianjin worth S$75.6m and a 40% stake in a 13-storey apartment block with 64 service apartments in Roppongi worth S$20.7m. More importantly, as these properties were bought with an ungeared property yield of 5.0% to 7.0%, we see accretion from these assets. However, as completion is slated for early 4Q, we do not expect significant contribution in 2006. We thus maintain our FY06/07F forecast for now.

Liquidity improved slightly. To finance the above acquisitions, ART had placed out 44m units at S$1.10 per unit. This has increased ART's freefloat from about 23% to about 30%. The bulk of the units continue to be held by CapitaLand (70% effective stake). We see this  o be the key impediment for the unit's performance, as the market continues to worry of possible overhang of units coming from CapitaLand's stake.

Maintain BUY. Since our last report in July, ART has appreciated over 20% from S$1.08 to S$1.30. Outlook for ART remains good, with organic growth benefiting from the improving macro environment in which it operates and visible stream of assets acquisitions from its parent, The Ascott Group. We have revised up ART's target size from S$2.0bn to S$2.5bn with a portfolio gearing of 40%. This in turn has a positive effect on our fair value which we revised up from S$1.32 to S$1.46. We continue to like ART for its growth prospects as well as its defensive nature (as reflected by its low price-to-book of 1.0x) and high DPU yield of about 5.0% (FY07F). We thus maintain our BUY rating.

Extracts fm OCBC Report dated 25-Jul-06,

Maiden acquisition

Good maiden result. Ascott Residence Trust (ART) reported its maiden results with 2Q06 coming in above its own IPO forecast. For the quarter, revenue was S$26.2m with distributable income of S$7.7m. These numbers were 4% and 15% above ART's own IPO forecasts. At the distributable income per unit (DPU) level, ART reported 1.69 cents for 2Q06 or about 5% above our forecast. The better results were attributed to higher revenue per available unit (RevPau) achieved in most markets and better operating efficiency.

Maiden acquisition in Tianjin. In conjunction with the result, ART has also announced its first acquisition. It is buying a 30-storey mixed development with 172 service apartments in Tianjin worth S$75.6m, giving a property yield of 7.0%. This asset is currently managed by The Ascott Group (TAG) and is part of the 45 third-party properties (worth S$1.50b) that TAG manages. More importantly, as the acquired property provides a yield of 135bp above ART's trading yield, we see the acquisition as earnings accretive. The latest news is in line with our initiation report where we articulated that ART is likely to use acquisition as a route for earnings growth.

Possible unit overhang. The main risk to ART comes from its multicountry revenue sources. In addition, ART has a free float of only about 23%, with the balance of units being held by The Ascott Group (30% stake) and CapitaLand (47% stake). There is a high probability of overhang of units coming from CapitaLand's stake.

Maintain BUY, but moderating fair value to S$1.32. Even though the outlook for ART is positive, it is not immune to the macro environment of rising interest rates which translate to higher cost of capital. Hence, ART needs to issue more units to acquire (compared to low interest rate environment) which means dilution to its valuation. We have thus revised down our fair value from S$1.50 to S$1.32. In terms of recommendation, we continue to like ART for its growth prospects as well as its defensive nature (as reflected by its low price-to-book of 0.82x) and high DPU yield of 5.7%. We thus maintain our BUY rating on ART.

Extracts fm UOBKayHian Report dated 25-Jul-06,

ART reports first distribution - 11% higher than forecast. Makes its first acquisition of Olympic Tower, Tianjin Business District ART announced its results for the quarter ended 30 June 06 yesterday.

• Distribution per unit (DPU) of 1.71 cents was declared, which is 11% above forecast. This represents an annualised yield of 6.4% based on the closing price of S$1.92 per unit on 21 July. 
  
• Revenue was S$26.5m, in line with forecast. Gross profit and total return were S$13.1m and S$4.1m respectively.
  
• The positive results were underpinned by an overall RevPAU growth of 7% in the second quarter for its 12 properties. Singapore and Philippines experienced double digit increases of 13% and 25% respectively.
  
• For the full year 2006, it is confident of delivering the forecast distribution per unit of 6.11 cents
  
• In addition, ART announced its first acquisition of the Somerset Olympic Tower in Tianjin Business District for US$47.25m (S$75.6m) from an affiliate company of GIC Real Estate and Consco Investment.
  
• The acquisition will be funded by equity and debt. ART’s gearing ratio will increase from 28.1% to 29.7%, giving it the opportunity for further acquisitions.
  
• Somerset Olympic Tower is a 30-storey mixed development property with 172 serviced residence units and a three-storey retail podium. It enjoys an occupancy level of about 90%.
  
• The acquisition is yield accretive to ART at an annualised property yield of 7%. Upon completion of the acquisition, targeted to be in Oct 06, ART will own 90% of the serviced residence portion of Somerset Olympic Tower and assume the lease for the commercial portion.

ART is the first Pan-Asian serviced residence Reit. Comprising an initial asset portfolio of over 2,000 units in 12 strategically located serviced residences and rental housing property in Singapore, China, Indonesia, the Philippines and Vietnam, ART currently has an asset size of about S$856m. China properties make up the largest percentage of business (41%) followed by Singapore (21.5%), Vietnam (19.6%), Indonesia (14.8%) and Philippines (3.1%) With its latest acquisition, its portfolio will increase to S$931m.

Going forward, ART will benefit from the positive business conditions in Asia as the region continues to be the fastest growing region in the world and a favoured destination for FDI from multinational corporations. It also has asset enhancement plans for two properties in China which could further enhance yields.

By Huiwen Yang
June 29 (Bloomberg) -- Ascott Group Ltd.'s property trust, which owns 12 serviced apartments in Asia worth S$856 million, said it's planning acquisitions to push its assets ``across the psychological S$1 billion ($625 million) mark'' in six to 12
months.

Ascott Residence Trust, which was set up by Ascott Group, the biggest serviced-apartment operator in Asia and Europe, plans to buy properties in Thailand, Japan, China and Vietnam, said Chong Kee Hiong, chief executive officer of the trust's manager, in an interview on June 27. ``We definitely plan to add more properties and we are looking at many,'' Chong said at a real estate conference in
Singapore. ``One of our strategies is growth and acquisition, sowe are definitely looking at that.''

Ascott's trust was the first among Singapore's 10 property trusts that went public with assets beyond the city-state. The trust was set up to expand by acquiring more properties, while the Singapore-based serviced-apartment operator focuses on
winning contracts to manage the assets. ``Demand for service residences will still be very strong in Asia. It's a matter of executing their acquisition strategy and delivering distributable growth to unit holders,'' said David Lum, senior investment analyst at Daiwa Institute of Research, who has a ``hold'' recommendation on the stock.

Acquisitions will come from purchases of properties from Ascott and other owners that are up to the trust's ``international standard'' in terms of branding and quality,
said Chong. The trust plans to use a combination of shares and debt to fund future acquisitions, he said. The trust may also benefit from news that China may announce rules this month aimed at curbing foreign investment in real estate to prevent an oversupply of property. ``That is actually good for serviced residences because
prices will come down to more realistic levels,'' Chong said. ``That's where it benefits us when we go in to acquire assets.'' In jurisdictions where there are restrictions on foreign ownership, finding good joint venture partners is one challenge, he said, as the trust prefers full ownership. He didn't say which countries limit foreign ownership of properties. Assets in Singapore would probably be packaged with those in markets such as China before Ascott sells them to the trust,
because returns are lower in the city-state, which is a more mature and stable market, he said.

-- Edited by tfwee at 01:18, 2006-07-01