On 27 January 2017, bought 5000 shares of Ascott Residence Trust at $1.185 each.
As my focus is to build a REIT portfolio this year ,I will be doing a positon sizing for my REIT holding which means a certain fixed percentage of my cash will be allocated to each REIT stock equally to cushion any downside.
Ascott , one of the world's largest serviced apartments, Hotels & rental housing owner , it operates in Asia Pacific, Europe and North America region.
A serviced apartment is basically a furnished apartment which rents out to corporation employee & general public for long term or short term stay. It has amnesties like gym , fitness center , laundry room n etc. It somehow operates like a hotel with room services.
It also operates rental housing too.
Ascott Reit's portfolio comprises 90 properties with 11,649 units in 38 cities across 14 countries in the Americas, Asia Pacific and Europe
Ascott gearing ratio is rather high at 41.3% , which means the Company debt level are 41.3% of its equity. One consolation is 82% of its debt are fixed interest rate & at effective interest rate of 2.4% ,which means if the Fed gonna hike the interest rate this year again which is very likely, the amount of repaying more money will be contained.
A look at its revenue & gross profit shows that the profits margin from Master Leases is much higher than its Management contracts.
Managements contract in this sense means the owner of the property will pay hotel operator a fee to run the daily operations of its business. This practice is very common when the owner of the property don't have the expertise to run the business or want to focus on expanding their business & left the daily running to a Management Company.
Revenue from Management contract is not stable because Ascott have to pay a fee to hotel operators for running the property & Ascott is responsible for the profits & loss of the property .Whereas Master leased provide more stable income as the operators pays Ascott a fixed rental & the operator bear the profits & loss of the property.
A glance at rental income from duration of the stay reveals that 65% of the rental income are less than 1 months of stay , mostly for travelers with short duration of stay .
**Above image are from Ascott Presentation slides
As my focus is to build a REIT portfolio this year ,I will be doing a positon sizing for my REIT holding which means a certain fixed percentage of my cash will be allocated to each REIT stock equally to cushion any downside.
Ascott , one of the world's largest serviced apartments, Hotels & rental housing owner , it operates in Asia Pacific, Europe and North America region.
A serviced apartment is basically a furnished apartment which rents out to corporation employee & general public for long term or short term stay. It has amnesties like gym , fitness center , laundry room n etc. It somehow operates like a hotel with room services.
It also operates rental housing too.
Ascott Reit's portfolio comprises 90 properties with 11,649 units in 38 cities across 14 countries in the Americas, Asia Pacific and Europe
Ascott gearing ratio is rather high at 41.3% , which means the Company debt level are 41.3% of its equity. One consolation is 82% of its debt are fixed interest rate & at effective interest rate of 2.4% ,which means if the Fed gonna hike the interest rate this year again which is very likely, the amount of repaying more money will be contained.
A look at its revenue & gross profit shows that the profits margin from Master Leases is much higher than its Management contracts.
Managements contract in this sense means the owner of the property will pay hotel operator a fee to run the daily operations of its business. This practice is very common when the owner of the property don't have the expertise to run the business or want to focus on expanding their business & left the daily running to a Management Company.
Revenue from Management contract is not stable because Ascott have to pay a fee to hotel operators for running the property & Ascott is responsible for the profits & loss of the property .Whereas Master leased provide more stable income as the operators pays Ascott a fixed rental & the operator bear the profits & loss of the property.
A glance at rental income from duration of the stay reveals that 65% of the rental income are less than 1 months of stay , mostly for travelers with short duration of stay .
**Above image are from Ascott Presentation slides
Is management contracts unique to ascott reit or is something common to other hospitality reits like cdlht, feoht or Fraser HT.
ReplyDeleteInteresting as this portion seems to be like ARA coy.
It is a norm n hospitality sector, the majority properties of CDLHT are Master leased & are pure hotel play ,unlike Ascott which is a hybrid of hotel & Serviced apartment.In this case, Ascott is the owner of the property & pay the hotel operator a management fee for running the hotel but Ascott have to be responsible for its profits & losses after deducting the fee paid to the operator . I have edited the management contracts portion as initially I have thought Ascott is the operator for management contracts but it was actually the owner of the property.
ReplyDeleteHi Dividend Town,
ReplyDeleteCould you share why did you buy at $1.185? Isn't it on the high side now? Happy new year!
Hi Ezhuat, Happy New Year to u!the entry price is not a deciding factor . I searching for assets which gives a higher income yield to grow my money rather than in bank account . Given its current price n distribution , the yield is abt 6% +.And to me, the risks commensurate with the rewards , compared to risk free Feb Singapore saving bonds yield at 2.4%.
ReplyDelete