- Ascott Residence Trust (ART) announced the acquisition of three serviced residences and four rental housing properties in Australia and Japan for S$298m (inclusive of associated debt), on an estimated FY15 EBITDA yield of c.5.5%.
- We are positive on the transaction as it provides exposure to the growing Melbourne hospitality market, where RevPAR is projected to increase by 7.3% in 2015.
- We also like the Japan hospitality market exposure which will benefit from rising tourist arrivals (up 45% y-o-y for 5M15).
- Given the c.S$100m investable funds in hand and ART yet to fully benefit from the acquisitions made last year, we believe ART’s earnings remain in an up cycle.
- We reiterate our BUY call and TP of S$1.34.
Source: http://www.dbsvickers.com/
