Note: Not vested.
A few things caught my attention.
The unwinding of the CCS is over (October), it is 8 months earlier than when they first projected it to be done by June 2015.
From the latest results, CCS costs is 3 mio, and 2.1 mio and 1.8 mio in Q2 and Q1. There is a acceleration in unwinding, yet DPU is increasing since Q1, despite further AUD currency weakness in Q3 compared to Q2.
Its operation in Australia (Biggest Contributor) is going from strength to strength since Q1
Occupancy rate is 78.5%; 84.3% to the latest quarter of 87.3%
Average room rate is $165; $162 to the latest quarter of $184.
Lets annualized Q2 results (more conservative) without the effect of CCS instead, we would get
(1.46 x 4 ) / 70, there would be a yield of 8.3%. Look pretty cool to me.
Assume a further 10% fall in AUD, resulting in a corresponding 10% fall in NPI. We get DPU of 4.6 cents just from Australia operations, and at Q3, Australia forms only 67% of total NPI.
At such, barring sudden and steep deterioration of hotel operations, we are looking at a yield of 7.5% to 8.3% for the next 2 years.
However AHT has several risks.
1) Its debts are rather concentrated over the next 3 years, from 2016 to 2018. Assume a 1.5% increase in the refinancing of 173 mio in 2016. It is going to make more than a dent to NPI since AHT is rather heavily geared.
2) If Tax exemption for overseas properties are not extended come March 2015, then its horrendous although I do not think it will be a issue.
Given I am already rather heavily vested at the moment, I will just keep my eyes open but hands away from this one. Unless, its shares prices continue to go down and LMIR continue to go up, I might then do some re-balancing and diversification while keeping the portfolio size intact.