Ascendas Hospitality Trust Prices Singapore IPO - Deal Journal - WSJ

Ascendas Hospitality Trust Prices Singapore IPO - Deal Journal - WSJ:

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Ascendas Hospitality Trust is a new REIT which is going to be listed in SGX. It is priced at $0.88. Its peers include CDL Hotel Trust and Ascott REIT which serves as a basis of comparison.

Comparing the three, Ascott REIT and Ascendas Hospitality Trust both have an attractive yield of 7.24% and 7.80% compared to CDL Hotel Trust which is at an unattractive 5.78%.

For NAV, Ascott REIT is the best at 0.844 (which means it is trading at about 15% discount to NAV) compared to Ascendas Hospitality Trust and CDL Hotel Trust which are both trading at a premium of 1.076 and 1.056 respectively.

CDL Hotel Trust has an added advantage because its debts are all unsecured, giving their unitholders a secured NAV of $1.86 which is 95% of the trading price. Ascott REIT's debts are secured and Ascendas Hospitality Trust has a small amount of secured NAV.

Looking at all these indicators, it does not seem that Ascendas Hospitality Trust is an attractive choice compared to Ascott REIT and CDL Hotel Trust. It serves more as an in-between these two trust. The attractive part is its yield which is the highest. At 2014, it will be 8.00% which is my target yield.

Having said that, it is priced at the bottom of the indicative price range, which suggest that there are not many investors who are keen to invest in it. I am not going to subscribe to its IPO as I am quite sure that it will drop on the first day. After that, then I will evaluate whether I should enter and it will be attractive by then.