Welcome to this week’s edition of top stock market highlights.
CapitaLand Ascott Trust (SGX: HMN)
CapitaLand Ascott Trust, or CLAS, announced the acquisition of three lodging assets in London, Dublin, and Jakarta.
The REIT has signed a memorandum of understanding with its sponsor, The Ascott Limited, to purchase these properties for an agreed-upon sum of S$530.8 million.
The three properties are The Cavendish London, a 230-unit hotel located in central London, Temple Bar Hotel, a 136-unit hotel in Dublin, and Ascott Kuningan Jakarta, a 185-unit serviced apartment in Jakarta’s central business district.
The Cavendish London was acquired at a pro-forma EBITDA (earnings before interest, taxes, depreciation and amortisation) yield of 4.1% but will be renovated and rebranded under The Crest Collection brand.
This renovation will be carried out in phases from the fourth quarter of 2024 (4Q 2024) to 4Q 2025.
The EBITDA yield is projected to increase to 6.5% post-stabilisation.
Temple Bar Hotel was acquired at a 7.6% EBITDA yield and will also undergo renovation from 1Q 2024 to 4Q 2024.
Finally, the EBITDA yield for Ascott Kuningan Jakarta stood at 6.7%.
The acquisition will raise the annual distribution per stapled security (DPSS) of CLAS by around 1.8% to S$0.0577.
CLAS will draw down S$51.9 million of debt to partially finance the acquisition and has launched an equity fundraising (EFR) to raise S$173.5 million. The remainder will be settled by proceeds from a private placement done in August 2022 and from divestment proceeds.
The EFR involved a private placement of 191,755,000 new stapled securities at an issue price of S$1.043 per unit and a preferential offer of 100,538,407 new stapled securities at an issue price of S$1.025.
Existing unitholders are entitled to subscribe to 29 preferential stapled securities for every 1,000 existing stapled securities that they hold.
The private placement saw strong demand from investors and was 2.7 times over-subscribed.
Meanwhile, the REIT manager also announced asset enhancement initiatives (AEIs) for two existing assets to increase their property values and provide a yield on AEI cost of around 11%.
The first property, Novotel Sydney Central, will see 72 rooms added across eight floors with gross floor area expanded by 10%.
The AEI will take place from 4Q 2024 to 1Q 2026.
The second property, Citadines Holborn-Covent Garden London, will see a refresh for its 192 units and façade and have its gym and meeting rooms upgraded.
This AEI will take place from 3Q 2023 to 1Q 2024.
US credit rating
The US saw its AAA sovereign credit rating cut by one grade by Fitch Ratings to AA+.
The credit agency justified the move as it believes the country’s finances will deteriorate in the next few years through a combination of tax cuts, new spending initiatives, and political gridlock.
This is not the first time that the US has seen its AAA rating downgraded.
Back in 2011, S&P Global Ratings initiated the same action and the downgrade was never reversed.
The federal deficit in the US hit US$1.39 trillion for the first nine months of the current fiscal year, more than double the level it was in the prior year.
And the US looks set to borrow even more, with its borrowing forecast for the current quarter raised to US$1 trillion from the US$733 billion that was predicted back in May.
Achieving financial freedom in Singapore
Singlife, a homegrown financial services company, has devised its inaugural financial freedom index.
The survey involved 3,000 Singaporeans and permanent residents aged between 18 and 65 and was done to better understand the attitudes of individuals towards achieving financial freedom in an environment of high inflation.
Consumers scored 60 out of 100 when it came to feeling financially free, and it will take approximately 27 years to accumulate a median level of savings of S$566,640.
This level of savings assumes that these consumers save at least S$1,733 per month.
The survey respondents into three main groups, with the financially free group making up just under 30% of the population.
The survey included six key aspects of financial freedom – retirement, income, spending, managing recurring expenses, managing unexpected events, and giving back to society.
Among these factors, the ability to retire at any time and have sufficient funds to give back to society were viewed as two important indicators of financial freedom
Crucially, more than half of the consumers were unsure of how to attain financial freedom.
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Disclosure: Royston Yang does not own shares in any of the companies mentioned.
