Ascott Residence Trust gunning for more overseas acquisitions

Here are its top three targets.

According to CIMB, Ascott Residence Trust's management reiterated their preference towards build up a meaningful portfolio size in each country so as to enjoy greater economies of scale and cost efficiency.

Here's more:

Potential locations for acquisition are second tier cities of China, Australia and Malaysia for their relatively higher cap rates of 5.5-6.5%, while Japan is attractive for its stability and low funding costs.

We estimate the acquisition to be about S$300m in size and 5.5-6.5% in yield. Organic growth from AEI. Historically, the average daily rates ART’s assets increased ~20% post renovation and AEIs typically have a payback period of 3-5 years.

ART currently has ongoing AEIs worth about S$48m that are scheduled for completion by 2016. We estimate a 3% increment in total revenue post renovations.