Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

Smartkarma

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Japan Hotel Reit Investment / Equity Capital Markets

Japan Hotel REIT plans to raise US$120million to fund the purchase of two hotel properties. The deal scores well on our framework and will likely be accretive to earnings. The stock has been holding up well since the announcement of the deal, despite the market turmoil. However, apart from an overall market risk, the company in particular could be more severely impacted from a slowdown in China, owing to its dependence on tourists.  <h2>Placement specifics </h2><ul><li>Company Name: Japan Hotel REIT Investment…</li></ul>

Japan Hotel REIT plans to raise US$120million to fund the purchase of two hotel properties. The deal scores well on our framework and will likely be accretive to earnings. The stock has been holding up well since the announcement of the deal, despite the market turmoil. However, apart from an overall market risk, the company in particular could be more severely impacted from a slowdown in China, owing to its dependence on tourists.  Placement specifics Company Name: Japan Hotel REIT Investment…

Japan Hotel REIT - Acquisition to Aid DPU Growth, but RMB Needs to Hold Up for the Stock to Perform

The deal scores well on our Momentum-Adjusted Deal Stag Framework for its track record and price momentum. We would take the deal given: <ol><li>Management plans to use the proceeds of the deal to buy 6 hotels worth JPY23bn, resulting in DPU growth of 9%pa in FY15, despite the 7% dilution from equity issuance; </li><li>The shares have rallied 6.3% since the deal was announced, implying that investors are positive on the acquisitions; </li><li>The company has a strong track record, with the stock having delivered 59% CAGR over the past five years; </li><li>Even though on an average the stock has returned -0.3% in the first month in its past three deals, however, the stock did return 7% in 1 month in its last deal, and 43% on aggregate over one year for its past three deals; and </li><li>In addition, the ongoing attempts by BoJ and Prime Minister Abe to reinvigorate the economy will likely ensure the continuance of easy monetary policy, which will lend support to REITs </li></ol>The primary risk, in our view, stems from the prolonged settlement, which would expose investors to market risk.

The deal scores well on our Momentum-Adjusted Deal Stag Framework for its track record and price momentum. We would take the deal given: Management plans to use the proceeds of the deal to buy 6 hotels worth JPY23bn, resulting in DPU growth of 9%pa in FY15, despite the 7% dilution from equity issuance; The shares have rallied 6.3% since the deal was announced, implying that investors are positive on the acquisitions; The company has a strong track record, with the stock having delivered 59% CAGR over the past five years; Even though on an average the stock has returned -0.3% in the first month in its past three deals, however, the stock did return 7% in 1 month in its last deal, and 43% on aggregate over one year for its past three deals; and In addition, the ongoing attempts by BoJ and Prime Minister Abe to reinvigorate the economy will likely ensure the continuance of easy monetary policy, which will lend support to REITs The primary risk, in our view, stems from the prolonged settlement, which would expose investors to market risk.

Japan Hotel REIT (8985 JP) - Acquisition to aid DPU growth; take the deal

Japan

United Urban Investment Corporation is a real estate investment trust (REIT). The Company directly invests in real estate properties such as shopping centers, offices, hotels, and residential buildings.

ORIX JREIT Inc. is a real estate investment trust (REIT) which invests in securitized real estate products.  The Company directly invests in real estate properties such as offices, rental housings, and hotels.

Invincible Investment Corp is a real estate investment trust (REIT) which  invests in securitized real estate products. TGR Investment invests in income  producing residential and office buildings.

Sekisui House Reit, Inc. is a real estate investment trust (REIT) which mainly invests in real estate and securitized real estate products. Properties are mainly Business office buildings and are located in Tokyo, Osaka and Nagoya area. Sekisui House Reit, Inc. also invests in commercial properties in foreign countries.

Advance Residence Investment is a real estate investment trust (REIT) which invests in securitized real estate products. The Company is established through the merger of Advance Residence Investment and Nippon Residential Investment Corporation.

Japan Prime Realty Investment Corporation is a real estate investment trust (REIT) which mainly invests in office buildings and commercial-use facilities nationwide.

Industrial & Infrastructure Fund Investment Corporation is a a real estate investment trust (REIT). The Company invests in real estate properties such as facilities for industry and infrastructure institution.

Industrial & Infrastructure Fund Investment (3249 JP)

Industrial & Infrastructure Fund Investment

Nippon Accommodations Fund Inc. is a real estate investment trust (REIT), which invests in income producing properties.  The Company invests in residential buildings.

Activia Properties, Inc. is a real estate investment trust (J-REIT). The company mainly invests in commercial and office buildings in the Tokyo metropolitan area.

AEON REIT Investment Corporation is a real estate investment trust (REIT) which invests in securitized real estate products. The REIT mainly invests in suburban shopping centers.

Keppel DC REIT is Asia's first pure-play data centre REIT listed on the Singapore Exchange. Keppel DC REIT's investment strategy is to principally invest, directly or indirectly, in a diversified portfolio of income-producing real estate assets which are used primarily for data centre purposes, as well as real estate related assets.

Suntec Real Estate Investment Trust is a commercial real estate investment trust. The Trust invests in income-producing real estate that is primarily used for retail and/or office purposes.

Keppel REIT operates as a commercial real estate investment trust. The Trust owns and invests in a portfolio of income-producing office buildings and related real estate assets. Keppel REIT offers its services in Asia and Australia.

Frasers Centrepoint Trust is a retail real estate investment trust focused on growing unitholder value through asset management, financial management and strategic investments.  The trust invests in retail properties in Singapore and overseas.

Medical Properties Trust Inc. is a self-advised real estate investment trust formed to acquire and develop net-leased healthcare facilities. These facilities include inpatient rehabilitation hospitals, long-term acute care hospitals, regional acute care hospitals, ambulatory surgery centers, and other single-discipline healthcare facilities such as heart hospitals.

The Geo Group Inc. operates private correctional facilities located mostly in the United States, but also in Australia, Canada, New Zealand, and South Africa.  The Company offers educational programs, vocational training, and rehabilitation therapy services.

KLCC Property Holdings Bhd comprises of units in a Real Estate Investment Trust (KLCC REIT) stapled together with the ordinary shares of KLCC Property Holdings Berhad. The Stapled Security, through the subsidiaries of KLCC Property Holdings Berhad, is engaged in providing facility management services and car parking management services.

Sunstone Hotel Investors, Inc. is a hospitality and lodging real estate investment trust that owns primarily upper scale and upscale hotels in the United States. The Company's hotels are operated under various branded names.

Highwoods Properties, Inc., with its operating partnership and subsidiaries, develops, manages, leases and acquires suburban office and industrial properties. Highwoods has expanded into markets throughout the southeastern and midwestern United States.

Urban Edge Properties is a real estate investment trust. The Company acquires, develops, owns and operates strip shopping centers and malls located in high barrier-to-entry markets. The Company operates within the United States.

Japan Hotel REIT Investment Corporation is a real estate investment trust(REIT) which invests in securitized real estate products. The Company mainly invests in real estate properties used in hotels.

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Japan Hotel Reit Investment (8985 JP)

Japan Hotel REIT - Acquisition to Aid DPU Growth, but RMB Needs to Hold Up for the Stock to Perform

Japan Hotel REIT plans to raise US$120million to fund the purchase of two hotel properties. The deal scores well on our framework and will likely...

Sumeet Singh

Japan Hotel REIT (8985 JP) - Acquisition to aid DPU growth; take the deal

The deal scores well on our Momentum-Adjusted Deal Stag Framework for its track record and price momentum. We would take the deal given:...

Sumeet Singh

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