Ascott REIT

Ascott REIT: Announced yesterday that it has entered into conditional agreements to acquire its first serviced residence in Kuala Lumpur, Malaysia and two serviced residences in Wuhan and Xi’an in China. At a total property value of $173.9m, management estimates the blended EBITDA yield to be 5.1% and expects the acquisitions to increase its pro forma FY13 DPU by 0.1¢ or 1.2%. Ascott REIT intends to fund the acquisitions wholly by debt from its existing debt facilities, which should increase its gearing ratio from 35.9% to 40.2% upon completion of the transactions. This would also effectively utilize all the proceeds from its rights issue raised in Dec 2013. OCBC maintains BUY on Ascott REIT with TP of $1.33.