I usually don't look at stocks/REITs in overseas currency but given how the yield of the local REITs have been compressed (~4/5%+). I took a quick look at these 2 US hospitality trust.
ARA US Hospitality Trust
There are 38 hotels/properties, 4,950 rooms by Hyatt (Hyatt Place and Hyatt House).
Offering Price: US$0.88
NAV: US$0.86
PB: 1.02
Estimated/Forecast Dividend Yield for 2019: 8.0%
Estimated/Forecast Dividend Yield for 2020: 8.2%
Gearing: 35.9%
Closing date and time for the Singapore Public Offer: 7 May 2019, 12pm
The revenue was lower for FY2016 due to the disruptions from renovations while the decrease in FY2018 was due to the following: 1) disruptions in operations from the marketing sale process of the Initial Portfolio by the previous owner and 2) supply increases in certain markets that diluted demand temporarily.
Naturally, we will see the same trend in the NPI.
RevPAR of around US$90+.
Eagle Hospitality Trust
There are 18 hotels/properties, 5,420 rooms across different brands - IHG, Marriot, Hilton, and Independent.
Offering Price: US$0.81 or US$0.82
NAV: US$0.89
PB: 0.91 - 0.92
Estimated/Forecast Dividend Yield for 2019: 7.9% to 8.0%
Estimated/Forecast Dividend Yield for 2020: 8.1% to 8.2%
Gearing: 38.0%
Increasing Revenue, NPI and distribution income year on year.
RevPAR of around US$90+ too. They are expecting RevPAR to improve due to newly renovated or refurbished hotels and rooms or improved revenue management. Certain hotels are expected to generate increased room revenue from contracts with corporates or government agencies. Room revenue at Holiday Inn Resort Orlando Suites – Waterpark is also expected to improve from potential partnerships with certain brands to improve occupancy rate in the off-peak season
KPO's Thoughts
I prefer Eagle Hospitality Trust over ARA US Hospitality Trust for a few reasons. The hotels listed by Eagle Hospitality Trust are by different brands and are of higher "quality" as compared to ARA US Hospitality Trust. People that stay in the above hotels are probably better off and would not mind paying more for various reasons or have some form of hotel loyalty/membership. The problem with ARA US Hospitality Trust is that it will probably only attract Hyatt members. Otherwise, for that price, Airbnb might be a better option?
In addition, the above numbers speak for itself. I am not sure if ARA US Hospitality Trust deserves to be trading at PB 1... For all we know, it may even be snatched up by yield hungry investor to sustain the above book valuation. No crystal ball to tell you what will happen exactly.
Last but not least, do take note of the exchange rate risk. You may be looking at capital gain for your investment but in actual fact, the return could be "countered" by the exchange rate. Having said that, it can also work for you and give the return a boost.
We will be sitting out for ARA US Hospitality Trust IPO. All the best to those that are applying for them! Huat ah!
You can find their prospectus here:
ARA US Hospitality Trust
Eagle Hospitality Trust
Do like any of the following for the latest update/post!
1. FB Page - KPO and CZM
2. Twitter - KPO and CZM
3. Click here to subscribe using email :)
4. Instagram - KPO_and_CZM (Did you see those delicious food photos to the right --> Unfortunately, you can't see it on mobile.)
ARA US Hospitality Trust
There are 38 hotels/properties, 4,950 rooms by Hyatt (Hyatt Place and Hyatt House).
Offering Price: US$0.88
NAV: US$0.86
PB: 1.02
Estimated/Forecast Dividend Yield for 2019: 8.0%
Estimated/Forecast Dividend Yield for 2020: 8.2%
Gearing: 35.9%
Closing date and time for the Singapore Public Offer: 7 May 2019, 12pm
The revenue was lower for FY2016 due to the disruptions from renovations while the decrease in FY2018 was due to the following: 1) disruptions in operations from the marketing sale process of the Initial Portfolio by the previous owner and 2) supply increases in certain markets that diluted demand temporarily.
Naturally, we will see the same trend in the NPI.
RevPAR of around US$90+.
Eagle Hospitality Trust
There are 18 hotels/properties, 5,420 rooms across different brands - IHG, Marriot, Hilton, and Independent.
Offering Price: US$0.81 or US$0.82
NAV: US$0.89
PB: 0.91 - 0.92
Estimated/Forecast Dividend Yield for 2019: 7.9% to 8.0%
Estimated/Forecast Dividend Yield for 2020: 8.1% to 8.2%
Gearing: 38.0%
Increasing Revenue, NPI and distribution income year on year.
RevPAR of around US$90+ too. They are expecting RevPAR to improve due to newly renovated or refurbished hotels and rooms or improved revenue management. Certain hotels are expected to generate increased room revenue from contracts with corporates or government agencies. Room revenue at Holiday Inn Resort Orlando Suites – Waterpark is also expected to improve from potential partnerships with certain brands to improve occupancy rate in the off-peak season
KPO's Thoughts
I prefer Eagle Hospitality Trust over ARA US Hospitality Trust for a few reasons. The hotels listed by Eagle Hospitality Trust are by different brands and are of higher "quality" as compared to ARA US Hospitality Trust. People that stay in the above hotels are probably better off and would not mind paying more for various reasons or have some form of hotel loyalty/membership. The problem with ARA US Hospitality Trust is that it will probably only attract Hyatt members. Otherwise, for that price, Airbnb might be a better option?
In addition, the above numbers speak for itself. I am not sure if ARA US Hospitality Trust deserves to be trading at PB 1... For all we know, it may even be snatched up by yield hungry investor to sustain the above book valuation. No crystal ball to tell you what will happen exactly.
Last but not least, do take note of the exchange rate risk. You may be looking at capital gain for your investment but in actual fact, the return could be "countered" by the exchange rate. Having said that, it can also work for you and give the return a boost.
We will be sitting out for ARA US Hospitality Trust IPO. All the best to those that are applying for them! Huat ah!
You can find their prospectus here:
ARA US Hospitality Trust
Eagle Hospitality Trust
Do like any of the following for the latest update/post!
1. FB Page - KPO and CZM
2. Twitter - KPO and CZM
3. Click here to subscribe using email :)
4. Instagram - KPO_and_CZM (Did you see those delicious food photos to the right --> Unfortunately, you can't see it on mobile.)
No comments:
Post a Comment