Stock Name: CDL HTrust
Company Name: CDL HOSPITALITY TRUSTS
Research House: DMG
DBS Vickers notes the property has an initial yield at 6.1% based on historical numbers. “We believe there is more upside this year, given the strong demand for rooms in 2011...we view this acquisition as positive and believe this is the re-rating catalyst that investors have been waiting for.” It keeps its $2.30 target and Buy call.
Company Name: CDL HOSPITALITY TRUSTS
Research House: DMG
CDL Hospitality Trusts (J85.SG) is flat at $1.97, with a low volume of 454,000 units traded, a muted response to news the trust is buying Studio M Hotel for $154 million, though analysts are largely positive on the acquisition.
DBS Vickers notes the property has an initial yield at 6.1% based on historical numbers. “We believe there is more upside this year, given the strong demand for rooms in 2011...we view this acquisition as positive and believe this is the re-rating catalyst that investors have been waiting for.” It keeps its $2.30 target and Buy call.
DMG says “the acquisition would be fully funded by debt. Assuming a debt cost of 3.5%, the acquisition is expected to be highly accretive, adding about 0.41 cents (or 3.5%) to FY11 DPU.”
It raises its FY11-FY12 DPU estimates by 3.4%-3.5%, and target price to $2.46. OCBC notes the proposed Master Lease of at least 20 years will provide a “long term stream of quality income.” It doesn’t have a rating on the units.
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