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Accordia Golf Trust: 6.8% to 7% distribution yield.

Monday, June 30, 2014

A new business trust is set to list in Singapore and it owns golf courses in Japan. The IPO is expected to price the units between 97c to $1.00 each and distribution yield is going to be between 6.8% to 7%.


I have not looked at the prospectus but I tried to understand how the manager is compensated. It is frankly quite complicated to me. It isn't as straightforward as a trust involving real estate. See if you understand it: Golf Course Management Agreement (page 3).

I also looked at some published figures and I am not sure that the assets are doing very well:


Click to enlarge.

I would draw attention to "net income per share" and "dividend per share". Interesting, isn't it?

See: financial highlights.

Could Accordia Golf Trust see a meteoric rise in unit price like Croesus Retail Trust did during its IPO? Your guess is as good as mine. However, I know that I will be giving the IPO a miss.

Read article:
Accordia Golf Trust to list on SGX.

Related post:
High yielding business trusts: A discussion.

7 comments:

Andy said...

Demand for Fraser Hospitality Trust is very high.

AK71 got do any research on it?

The hotels and serviced residences real estate investment trust (REIT) said its international placement of 139.6 million stapled securities at S$0.88 apiece attracted interests valued around S$2.5 billion - which translates to a subscription rate of around 21 times.

http://www.channelnewsasia.com/news/business/singapore/frasers-hospitality-share/1222920.html

AK71 said...

Hi Andy,

Nothing in depth but with a 7% distribution yield and a gearing of about 40%, I don't feel that Fraser Hospitality Trust is attractive enough. Based on these two metrics alone, a better investment could be found in Ascendas Hospitality Trust which, now relatively free of financial engineering to bump up DPU, offers a 7.5% yield with a gearing of about 35% currently.

baiyun said...

Any opinions on the upcoming starburst ipo? It appears to be a niche area so should have quite high moat.

AK71 said...

Hi baiyun,

I have avoided IPOs for many years unless I felt like giving in to my speculative streak. ;p

This is because of the belief that IPOs are priced to better benefit the issuers than retail investors. :)

A friend and fellow blogger did a good write up on this IPO and you might want to see what he has to say: Starburst IPO.

AK71 said...

Accordia Golf Trust (AG Trust), the first business trust with investments in golf course assets in Japan to list on the SGX, has priced its offering at 97 cents per unit.

AG Trust will have an initial portfolio of 89 golf, courses and related assets from that country, is scheduled to commence trading on Aug 1.

The trust intends to distribute its entire distributable income to unitholders for the current FY2015 ending March 31, 2015. At the offer price of 97 cents per unit, the annual distribution yield will be 9.1%.

Slightly more than 782 million units were offered in the IPO, with 41.163 million units allocated for the public offering in Singapore.

Most of the units were offered to Japan-based investors via public offer without listing in Japan.

The IPO will also be the largest on SGX this year, raising gross proceeds of $759 million.

Source:
http://www.theedgesingapore.com/the-daily-edge/business/49244-accordia-golf-trust-price-offering-at-97-cents-per-unit.html

AK71 said...

Pricing at 97c gives a 2015 dividend yield of 9.1% including non-recurrent income. Without non-recurrent income, it is 7%.

NAV per unit is only 32c. 97c is 3x NAV! Investors are paying a huge premium.

All in cost of debt: 2.5%.

Gearing level is 30.2%. The Trust sets itself a cap of 40% in gearing.

Reference:
http://www.financeasia.com/News/388918,accordia-prices-singapore-ipo-at-bottom.aspx

AK71 said...

Accordia Golf Trust says it has decided to reallocate 70,456,000 units from the Singapore Public Offering and the Placement to satisfy the strong indications of interest pursuant to the Japanese Public Offering. For the units under the Singapore public offering, a total of 28,839,000 units were allocated to all applicants who submitted valid applications. This works out to the Singapore public offering being approximately 0.7 times subscribed. Source: CNA

0.7x subscribed. -.-"

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