SINGAPORE (June 5): UOB Kay Hian is maintaining its “hold” on Ascott Residence Trust (ART) after the REIT announced its third New York hotel acquisition.
ART is acquiring DoubleTree by Hilton for US$106 million (S$146.5 million).
Including acquisition fees and other costs, total costs will go up to US$111.9 million and ART’s US exposure by portfolio value will rise to 12.3% from 9.7%.
EBITDA yield of the asset is also estimated at 6% compared to ART's forward trading yield of 6.4%.
In a report last week, lead analyst Derek Chang says JLL has valued the target asset at US$109.2 million.
ART announced that the new property will be a three- to four-star hotel, with 70-80% of contributions stemming from leisure demand.
Last year, Manhattan welcomed a record of 60.3 million tourists.
At the same time, ongoing scrutiny on industry disruptor Airbnb in New York should also spell some relief for the target hotel.
Airbnb is facing regulatory crackdowns as short-term apartment rentals were announced in April to be illegal. Since 2015, Airbnb has already removed 4,200 New York listings.
Chang recommends investors enter and exit ART at S$1.00 and S$1.17 respectively.
The counter is trading at S$1.14.