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Accordia Golf Trust: Reasonable or realistic price?

Monday, December 9, 2019

This is in response to a reader's question.

As it is going to be about managing expectations, I think it is important enough to be a blog.

In a recent blog on Accordia Golf Trust in response to a friend's question as to whether it was realistic to expect an offer price for Accordia Golf Trust's golf courses which would translate to $1.20 a unit at the Trust level, I explained that although I didn't know if it would happen, it certainly wasn't an unreasonable expectation.

If you are a new reader or cannot remember why I said that, I have provided the link to that blog at the end of this one.

Now, being reasonable and being realistic are quite different.

I said in the same blog,

"... to be realistic, when selling an entire portfolio, it is usually more difficult to command a big premium compared to selling the properties individually."

and I also said,

"Nonetheless, a compelling offer has to be one that is substantially above the NAV."

What is considered "substantially above the NAV"?

Well, there isn't a right or wrong answer and it is going to be really a matter of opinion.

For me, I feel that a 10% to 20% premium to NAV would be considered substantial enough to be pretty attractive if we were to use our past experience with Croesus Retail Trust and Saizen REIT as yardsticks.

In an earlier blog on Accordia Golf Trust, I daydreamed about the possibility of selling the golf courses at a 60% premium to their valuations.

Remember, I said I was merely speculating and that it was a daydream.

It might have been a reasonable expectation but it might not have been a realistic one.

Even as we manage our expectations, we can only hope that what Accordia Golf Trust received was not a lowball offer.

The next thing I am going to talk to myself about can be related or unrelated to the blog topic at hand, depending on our perspective.

You might or might not know about the "Reasonable Person Test".

I learned about the "Reasonable Person Test" when I did Business Law as a module donkey years ago.

If this is something new to you, it is probably good to learn about it.

The question to ask is, realistic or not,

"Would a potential jury agree that $1.20 a unit is a reasonable asking price?"

Here is a video on the "Reasonable Person Test":

Related post:
Accordia Golf Trust: Offer must be way above valuation.


WTK said...

Hi AK,

It does not matter whether there is any offer as per my perspective. The trust still generates reasonable and good yield. If there is an offer, I can consider and may or may not accept the offer. It will be a win-win situation. The most important thing is to spread the eggs into many baskets. It gives me the peace of mind and I go about doing the things of my interests.

My two cents of opinion.


AK71 said...

Hi Ben,

I think this must be the fastest anyone has ever responded to one of my blogs.

3 minutes after the blog was published!

Amazing! :D

I will be quite happy to stay invested in Accordia Golf Trust if the offer is rejected too. :)

Your Ka-ki! said...

Hi Ben/Ak

Me too if the offer is too low like 75c - 82c. I rather keep accordia until next "Ak and Friends" meeting.

There is no hurry to kill the golden goose as it says.

AK71 said...


Until the next "Evening with AK and friends" means you might be holding on for a long, long time. ;p

You can enjoy collecting many golf balls made of solid gold until then. ;)

Shen said...

Hi AK,

Can we get your opinion on the latest from Accordia?
Don't really understand what the numbers mean for us as shareholders!
some people say its worth 71c a share for us ..

Shen said...

Hi AK,

Can we find out your thoughts on the latest announcement for Accordia?
Wondering what its significance is for shareholders. And what kind of thoughts will be going thru the manager/trustee.


AK71 said...

Hi Mike,

They have appointed Daiwa Capital Markets Singapore and Ernst & Young Corporate Finance as the financial advisers and I will just wait to see what they say.

Accordia Golf Trust: Buying cheap and cheaper.

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