Ascott partners QIA
- Ascott forms a 50:50 JV with Qatar Investment Authority. Serviced residence fund with initial AUM of USD600m.
- Provides the fresh capital to fund expansion for target to double serviced residence portfolio by 2020.
- Maintain HOLD and SGD3.85 TP. Stock appears fairly priced and we do not see material near-term catalyst.
What’s New
- CapitaLand announced Ascott has entered into a 50:50 JV with Qatar Investment Authority (QIA) to set up a serviced residence fund with an initial AUM of USD600m.
- While there is no geographical restriction, this fund will initially target assets in Asia Pacific and Europe.
- There are no seed assets for this new JV, but management does not rule out acquiring assets from the partners in the future.
- This is part of CapitaLand’s plan to grow its scale, fees income base and launch five to six funds with a total AUM of SGD8-10b by 2020.
- Management highlighted its IRR target of mid-to-high single digit and 12-18% for assets in Singapore and China on an un-leveraged basis.
What’s Our View
- We view this JV with a strong capital partner positively as it will provide CapitaLand with an alternate source of capital to fund its expansion.
- However, management stressed that this partnership is not driven by the recent MAS rulings and its publicly-listed REITs remains a key source of capital.
- Operationally, it will provide fresh capital for Ascott to achieve its target of 80,000 units under management by 2020, from the current 40,943.
- Maintain HOLD as the stock appears fairly priced and we do not see material catalyst in the near term.
- TP remains SGD3.85, based on 15% discount to RNAV of SGD4.53.
(Derrick Heng, CFA)
Source: http://www.maybank-ke.com.sg
