Accordia Golf Trust - OCBC Investment 2017-04-07: Leading a new game?

Accordia Golf Trust - OCBC Investment 2017-04-07: Leading a new game? ACCORDIA GOLF TRUST ADQU.SI

Accordia Golf Trust - Leading a new game?

  • Invests in Japan’s golf course assets.
  • No asset injections since listing.
  • But may change with sponsor privatisation.

One of a kind 

  • Listed on the SGX in Aug 2014, Accordia Golf Trust (AGT) is the first and only business trust so far that focuses on investments in golf course assets in Japan. 
  • Indeed, the principal investment strategy of AGT is to invest, directly or indirectly, in the business of owning a portfolio of stabilised, income generating golf courses, driving ranges and golf course related assets worldwide, with an initial focus on Japan. 
  • AGT is managed by Accordia Golf Trust Management Pte Ltd (Trustee-Manager), which is 49% held by Accordia Golf Co. Ltd (sponsor) and 51% held by Daiwa Real Estate Asset Management.

Visited its golf courses in Greater Tokyo 

  • We visited six of AGT’s golf courses in the Greater Tokyo region recently to learn more about the business as well as the culture of golf in Japan. 
  • AGT’s initial portfolio comprises 89 golf courses located across Japan with 86.0% of them (based on their appraised values as at 31 Dec 2016) located in the three largest metropolitan areas in Japan. The initial portfolio had an appraised value of JPY150.9b as at 31 Dec 2016. 
  • Utilisation rates in FY16 averaged at 77.9%, while the number of plays in Japan has remained stable over the years. A discernible trend, however, is the increase in proportion of plays by senior members.

To finally see asset injections? 

  • Since AGT’s IPO in 2014, it has not added any golf courses to its portfolio. We understand that this is due to financing issues and most of its golf courses are already pledged as collateral to creditors. 
  • Should AGT be able to reach a refinancing deal with its lenders and achieve lower borrowing costs with the help of MBK Partners which recently privatised AGT’s sponsor, it may pave the way for more asset injections by the sponsor. 
  • We understand that there are about 20 stabilised golf courses out of the 43 or so golf courses that the sponsor has but not yet injected into AGT. 
  • Based on Bloomberg consensus, the stock is currently trading at 0.78x FY18 P/B with a 9.2% forward dividend yield. 
  • We do not have a rating on AGT.

Low Pei Han OCBC Investment | 2017-04-07
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