Ascott REIT

Ascott REIT: In a post 1Q14 results meeting, management said that it has a remaining debt headroom of about $140m before reaching a gearing level of 40%. It is still evaluating a few acquisitions, mainly in Asia, but also in Europe, and will look for DPU-accretive properties or have a short turnaround period. Its properties still depend on financial institutions, but management has seen some pickup from the shipping industry. The occupancy rates for all of its properties are over 80% and have improved YoY, while demand in 2Q14 looks steady. Daiwa maintains Hold rating and TP of $1.24, citing that a positive risk for Ascott REIT would be the deployment of its remaining debt headroom for a highly DPU accretive property acquisition in Asia, while a negative risk would be a regional slowdown in foreign direct investments or a severe revenue disappointment in one of its major markets in subsequent results.