Singapore-listed hotel landlord Ascendas Hospitality Trust (A-HREIT) (SGX:Q1P) has projected a dip in Distribution per Stapled Security (DPS) upon its acquisition of Park Hotel. This projection is tabled in an official announcement that details the pro forma financial effects of the proposed acquisition of the said property.

Park Hotel will be Ascendas Hospitality Trust's first property in Singapore.

The drop in DPS has been listed despite a projected jump in Net Property Income from S$48.1 million to S$58.3 million and a corresponding increase in distributable income from S$34.7 million to S$43.3 million.

This is due to the fact that the pro forma has been projected with A-HREIT issuing between 207 million and 259 million new units at an issue price of S$0.965 per unit. The acquisition of Park Hotel is expected to be largely funded by placements of new units, thus diluting the distributable income.

However NAV per unit is projected to increase from S$0.82 to S$0.86 in line with the new portfolio size of A-HREIT. The trust currently has 10 hotel properties across key cities in China, Japan and Australia. Upon acquisition, Park Hotel will be A-HREIT's first property in Singapore.

It is important to note that the pro forma financial effects are for illustrative purposes and do not represent AHTRUST’s DPS following completion of the acquisition. Unit holders should also note that the hotel business is seasonal and that the period of projection may not be representative of full year performance. Details of the acquisition will be made known in due course.

By Ridzwan Rahmat

Ridzwan has been analysing REITs and business trusts since 2008, and personally manages a portfolio comprising mainly of SGX-listed REITs. He founded REITsWeek in 2013.