Accordia Golf Trust

Accodia Golf Trust (AGT) is the first business trust comprising investments in golf course assets in Japan to be listed on the SGX-ST. AGT is constituted with the principal investment strategy of investing, directly or indirectly, in the business of owning a portfolio of stabilised, income-generating golf courses, driving ranges and golf course related assets worldwide, with an initial focus on Japan. AGT's Initial Portfolio will comprise 89 golf courses (including golf course related assets relating to such golf courses) located across Japan.

AGT was listed on SGX at an IPO price of $1.0646 on 1 August 2014.

Its Earning per unit (EPU) and distribution per unit for each quarter since listing are as follow:

Period        EPU            DPU3Q 2015    3.76 cents    3.91 cents
4Q 2015   -1.01 cents    1.79 cent
1Q 2016    2.41 cents    1.76 cents
2Q 2016    1.63 cents    0.56 cents
3Q 2016    3.50 cents    2.25 cents

Note that the DPU for 3Q 2015, 1Q 2016 and 3Q 2016 were indicative as AGT makes distribution twice per year, after the release of 1H and FY results. In 2Q 2016, it has paid out 2.32 cents of dividend and 1.84 JPY (2.25 cents) was available for distribution in 3Q 2016 (but will be distributed together with 4Q 2016 DPU after the release of FY 2016 results). Assume that 4Q 2016 DPU is the same as 4Q 2015 DPU, the projected DPU for FY 2016 will be 6.36 cents. At the last transacted price of 64.0 cents, the yield is expected to be about 9.94% which is very attractive.

The key financial ratios for AGT are as follow:
Share price – 64.0 cents
DPU – 6.36 cents (extrapolated)
Yield – 9.94%
PER – 6.37
P/B – 0.72
Gearing – 53.8%

As AGT’s income and DPU heavily depend on the weather, the share price will drop when the DPU is affected by bad weather. In addition, the gearing of AGT is very high, which suggests that it will need to launch a right issue or share placement to finance any yield accretive purchases. In consideration of the above, I took advantage of the recent strength in share rice to dispose all my holding in AGT with a small gain of about 4.3%, inclusive of the dividend ex-dated in November 2015 and paid in December 2015.