Ascott Residence Trust: Eurozone recovery and positive FX movements
Gradual recovery in the Eurozone should progressively translate into
better leasing prospects for ART's European serviced residences. During
the 2Q13 analyst briefing, management expressed that it believed that
the whole portfolio's RevPAU for 2H13 will be flat or slightly higher
than 1H13, assuming that exchange rates stay constant for the rest of
the year. Assuming flat RevPAU/rental income in local currency terms on a
HoH basis for 2H13, we note that the overall exchange rate movements
for 2H13 so far could actually increase ART’s gross profit by ~1.0% HoH,
chiefly due to improvements in EUR and GBP versus the SGD. Going
forward, ART's geographically diversified portfolio in this volatile
environment will provide some resilience to negative FX movements. We
maintain our FV of S$1.37 and upgrade ART from Hold to BUY as FY14 yield
is attractive at 7.6% based on yesterday’s closing price. (Sarah Ong)
For more information on the above, visit www.ocbcresearch.comfor the detailed report.
NEWS HEADLINES
- US stocks fell on Mon after notching three weeks of gains, as investors worried about another standoff in Washington.
- New policy measures unveiled this month - with stricter rules for
hiring skilled foreigners and tweaks to certificate of entitlement (COE)
categories - will push consumer prices higher in coming months,
economists say.
- The credit scores of consumers here have improved from a year ago even
as they borrowed more, says Credit Bureau Singapore (CBS).
- DeClout's acquisition of a 50.1% stake in US company Procurri has
allowed it to globalise its IT asset recovery and independent
maintenance services business.
- Hotel Grand Central has received the go-ahead from local authorities
to redevelop the site of a hotel and investment property in
Christchurch, New Zealand, that was demolished after it was damaged in
the 2011 earthquake.
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