The market has been rather quiet for the past few months. Two things however happened in this week. First is the announcement of Temasek Holdings bid to increase shareholdings in Keppel Corporation. Second is the green light given by the unit-holders to merge Ascendas Hospitality Trust (A-HTrust) with Ascott Reit.
Temasek
Holdings is bidding to increase their stakes in Keppel Corporation through a
proposed offer price at $7.35.
It
was quite an unexpected price since Keppel Corporation price has been hovering
around $6 for a long time. I used to have some holdings in Keppel
Corporation, mostly bought during the oil crisis in year 2016 below $5. I sold
all of it between year 2017-2018. My main concern is the volatility of the
oil and gas industry, which was difficult to benchmark as my focus is more on
sustainability for long term.
The merging of A-HTrust with Ascott Reit is a big event, this would make them into Asia-Pacific largest Hospitality Reit.
Business Times News
So how does it impact the existing unit-holders? For existing Ascott unit-holders, it would mean an expanded portfolio with stronger cash holdings after the merge, the best part about it is A-HTrust has many Freehold assets under its portfolio. Unlike those properties with limited number of years on lease basis, Freehold properties offer more value and stability. For A-HTrust unit-holders, apart from an expanded portfolio, A-HTrust shares will be converted into Ascott shares. The conversion rate and allocation are as follow:
So how does it impact the existing unit-holders? For existing Ascott unit-holders, it would mean an expanded portfolio with stronger cash holdings after the merge, the best part about it is A-HTrust has many Freehold assets under its portfolio. Unlike those properties with limited number of years on lease basis, Freehold properties offer more value and stability. For A-HTrust unit-holders, apart from an expanded portfolio, A-HTrust shares will be converted into Ascott shares. The conversion rate and allocation are as follow:
What it means is for every
1000 A-HTrust shares, we will get $54.30 cash and 794 new Ascott shares.
I have holdings in both Ascendas and Ascott. This merger will one shot turn my Ascott holdings into the largest allocation in my portfolio, at the same time I will be getting some cash returns from my A-HTrust holdings as well. Based on the number of total holdings I have, overall allocation in portfolio after the merge will likely exceed 10% which is more than my own standard % benchmark in diversity. This might call for a re-balancing of my portfolio. The stock prices of both Ascott and A-HTrust has since soar after the announcement, this clearly show how positive the market react was to it. Until then, we shall see.
I have holdings in both Ascendas and Ascott. This merger will one shot turn my Ascott holdings into the largest allocation in my portfolio, at the same time I will be getting some cash returns from my A-HTrust holdings as well. Based on the number of total holdings I have, overall allocation in portfolio after the merge will likely exceed 10% which is more than my own standard % benchmark in diversity. This might call for a re-balancing of my portfolio. The stock prices of both Ascott and A-HTrust has since soar after the announcement, this clearly show how positive the market react was to it. Until then, we shall see.
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