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Ascott Residence Trust and Ascendas Hospitality Trust to become one.

Wednesday, July 3, 2019

In reply to a reader's comment: HERE.

Ascendas Hospitality Trust (AHT) has been a good investment for income over the years.

AHT has also been rather undervalued by Mr. Market for most of those years.



This deal shows the true value of AHT.

"ART will acquire all AHT stapled units at $1.0868 each, comprising $0.0543 in cash and 0.7942 ART-BT stapled units issued at a price of $1.30."

Source: 
Yahoo!Finance.




I first invested in AHT in 2014 and paid a price of 72c a unit.

See:
AHT: A nibble.

Over the years, I accumulated at prices lower than my initial purchase price, sometimes significantly lower, whenever Mr. Market felt depressed about AHT.

Of course, AHT became a relatively substantial part of my portfolio.

AHT has been generating meaningful passive income for me regularly.




In 2017, I said AHT should continue to deliver.

"Not too concerned with the fluctuation in unit price. As long as the trust continues to do well enough to pay me an income that makes sense, I am happy."

See:
AHT should do well.




I am glad to see that I will receive some cash payment and also receive units in the enlarged entity.

This means that I will continue to enjoy income distributions after the deal is done.

I like to think that patience will be rewarded.

In my experience, it has mostly been the case.

Congratulations, fellow AHT investors.




Recently published:
2Q 2019 passive income.
(With contribution from AHT)

10 comments:

singaporean learning to retire well said...

congrats to you!
I was actually thinking of initiating a position to buy Ascendas H Trust after looking at its yield in such times. unfortunately..........too slow.

Evilbdboi said...

Hi AK its good to see you posting abit more recently. Hope you cont to blog here a one line article is fine too

AK71 said...

Hi SLRW,

Thank you. :)

There will always be another time. :)

AK71 said...

Hi Evilbdboi,

One line articles?

Blogger wouldn't like that.

I am Facebook free now.

I don't think you want to see me being Blogger free too. ;p

MPC said...

Hi AK you don't mind the lower yield by Ascott Residence Trust-BT as compared to the higher yield you can get from Ascendas H Trust?

AK71 said...

Hi MPC,

When unit price goes up, yield will fall, all else remaining equal.

The offer values AHT at more than $1 a unit which is higher than what it has been trading at for a long time.

Naturally, distribution yield will be lower if DPU remains the same or even slightly higher.

What is more interesting to me is the DPU which seems to receive a slight boost if the deal is approved.

Cory said...

Grats to all.

Hi AK, one question I have is how is it mathematically possible for both AHT and Ascott Reit to be DPU accretive after merger ? Isn't this a zero sum game at the point of merge.

Cory

AK71 said...

Hi Cory,

I suspect there is some financial engineering involved although I do not know what it is. ;)

Right away, I suspect something might have changed with gearing.

However, when I saw that the gearing of the new entity is a healthy 36.9%, I did not look further into the matter.

Too lazy to crunch numbers. ;p

Betta man said...

This deal is not good for AHT shareholders. And will end up with odd lots of the merged entity.

https://theunnecessaryjob.blogspot.com/2019/07/ascott-residence-trust-art-buys.html

AK71 said...

Hi Betta man,

A blog in reply to your comment:

Ascendas Hospitality Trust's investors getting a bad deal?

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