Accordia Golf Trusts

Interesting news in the US.

Apollo Makes $1.1 Billion Wager That Golf Remains a Cash Cow

Along with a business update in their monthly report. Seems like their first quarter is looking good.

                                Number of Visitors (thousands)

                     Actuals                YoY change                3 Yr Average Change
Apr                517                        +5.3%                            +4.9%
May               587                        +2.4%                            +1.0%
Jun                514                        +4.6%                            +2.4%

Am surprised that Accordia is holding up quite well. 
Jap yen to SGD has weakened from 0.01356 to 0.1217 in the past 1 year. 

The payout for business period Apr to Sept last year was 2.45 cents per share.
Now that Southern Japan has been ravaged by typhoon, would they be able to pay out the same amount assuming no change in other variables?
Unlikely in my opinion even though the freak weather is a one-off event.

I do a map review of the south island golf courses, and only a few golf courses are near those perfectures which got hit badly.
Most of the golf courses are located in the middle and north. Furthermore, the next quarterly is April, May and June. The Rain mainly in July.
So likely the impact is minimal if any as you can see from the monthly report visitors.

(12-07-2017, 08:51 AM)Squirrel Wrote: Interesting news in the US.

Apollo Makes $1.1 Billion Wager That Golf Remains a Cash Cow

Along with a business update in their monthly report. Seems like their first quarter is looking good.

                                Number of Visitors (thousands)

                     Actuals                YoY change                3 Yr Average Change
Apr                517                        +5.3%                            +4.9%
May               587                        +2.4%                            +1.0%
Jun                514                        +4.6%                            +2.4%

Although one quarter doesn't make a year, it is an encouraging performance as the costs for this business is almost entirely fixed (ie whether it is nice weather or bad weather, you still need to have the same number of employees at the golf course) and hence even a small increase in players causes a significant increase to the bottomline.

VESTED

Quarterly results are out. DPU is up 17.6% year on year.

http://infopub.sgx.com/FileOpen/AGT%20-%...eID=467092

http://infopub.sgx.com/FileOpen/AGT%20-%...eID=467093

Encouraging to see that the company is heading initiatives to actually attract the younger crowds.

I think most unit holders are anticipating better results this quarter as the past 3 months visitor data were all positive.
The first thing that struck me in reading this set of results material is that it feels very different from all the quarterly material in the past.
It feels like they are trying to play down the improved results and silently getting down to work on getting more visitors with the gps, ladies, kids schemes, etc.

Been attending the AGMs since listed. The last round just a couple weeks ago, the unitholders were more vocal in voicing out their displeasure and impatience. Example, no acquisitions since listing, no forex hedging last year when the rates were pro SG holders. How to actively engaged foreign visitors.

Regarding the currency hedging, I once asked one of the directors (offline) about the proportion of unitholders nationality. I got the numbers scribbled somewhere, there are more jap than sg holders. This could be the reason why mgmt don't hedge. More unitholders are probably happy when jap appreciates aginst sgd.

Base on info from the "Top golf operators/owners in Japan" slide that AGT always include at the end of their presentations, Accordia (trust + sponsor) is no longer the number 1 market share in Japan. PGM group has overtaken them by 1. Accordia now has 131 vs PGM's 132.

From 2015 to 2017, PGM group had increased their courses from 129 to 132 while Accordia had decreased from 137 to 131.

AGT started off with 89 courses and this had not changed. So the sponsor had been disposing courses elsewhere. AGT has a right of first refusal for all golf course related assets owned by the Sponsor. I do not know if those disposed by sponsor are good assets or how/where they were disposed (to PGM?). Was AGT not able to acquire those courses because they could not settle the loan issue with the banks. During last AGM, they did explained that there were some issues with getting the loans from the banks. Even the existing one was not easy to negotiate and they settled for 1 year extension. Sorry I not savy with banks/loans stuffs so can't share much useful info here.

In the near term (1 to 2 years), AGT is not likely to do any acquisitions while it grapples with the 3 batches of loans which are maturing one after another. This I believe is the big uncertainty that hamper the growth of the trust. Meanwhile I am positive about their regular business of maintaining the visitor numbers (excl uncontrollable factors like weather). Payout should be sustainable at a rate slightly better than REITS.

Research report as follows

http://sharedresearch.jp/system/report_u...1506390502

It states on page 5 that

"On September 26, 2017, Shared Research updated the report following interviews with Accordia Golf Trust."

And subsequently on page 14

"External growth opportunities (adding more golf courses)
AGT plans to expand operations by adding more golf courses (external growth) via loans. In particular, AGT plans to buy about five additional golf courses per year on average (as of May 2017, it owned 89 courses). The company’s sponsor, Accordia Golf, has several golf course acquisition candidates to be sold to AGT.

In the medium-term, plans to purchase of around 25 golf courses using more loans
As for the guideline of loans, AGT targets an LTV (loan-to-valuation; debt/appraisal value of portfolio) ratio in the medium term at 40–50%. As of end FY03/17 its LTV ratio was 28.9%. Boosting this to 40% demonstrates scope to increase borrowings by around JPY40bn. According to AGT, one golf course costs around JPY1.5bn, so the target LTV ratio implies the purchase of around 25 golf courses.

Golf courses to be obtained from sponsor Accordia Golf
AGT (via Accordia Golf Asset LLC) has right of first refusal over golf courses that Accordia Golf buys or sells. Accordia Golf has given an undertaking (i.e., is obligated) to offer golf courses it already owns and future asset purchases to AGT, which also has call options
over certain golf courses (for discussion of right of first refusal, undertaking, and call options, see the Business section). "

Its a pretty long but really informative piece of research report. Given it's company sponsored report, would that give more credence to the part mentioning plans of purchasing 25 golf courses at 5 golf courses per year? That should bump up dividends if it really happens.

(26-09-2017, 03:55 PM)Squirrel Wrote: Research report as follows

http://sharedresearch.jp/system/report_u...1506390502

It states on page 5 that

"On September 26, 2017, Shared Research updated the report following interviews with Accordia Golf Trust."

And subsequently on page 14

"External growth opportunities (adding more golf courses)
AGT plans to expand operations by adding more golf courses (external growth) via loans. In particular, AGT plans to buy about five additional golf courses per year on average (as of May 2017, it owned 89 courses). The company’s sponsor, Accordia Golf, has several golf course acquisition candidates to be sold to AGT.

In the medium-term, plans to purchase of around 25 golf courses using more loans
As for the guideline of loans, AGT targets an LTV (loan-to-valuation; debt/appraisal value of portfolio) ratio in the medium term at 40–50%. As of end FY03/17 its LTV ratio was 28.9%. Boosting this to 40% demonstrates scope to increase borrowings by around JPY40bn. According to AGT, one golf course costs around JPY1.5bn, so the target LTV ratio implies the purchase of around 25 golf courses.

Golf courses to be obtained from sponsor Accordia Golf
AGT (via Accordia Golf Asset LLC) has right of first refusal over golf courses that Accordia Golf buys or sells. Accordia Golf has given an undertaking (i.e., is obligated) to offer golf courses it already owns and future asset purchases to AGT, which also has call options
over certain golf courses (for discussion of right of first refusal, undertaking, and call options, see the Business section). "

Its a pretty long but really informative piece of research report. Given it's company sponsored report, would that give more credence to the part mentioning plans of purchasing 25 golf courses at 5 golf courses per year? That should bump up dividends if it really happens.

Hi Squirrel.

You are correct that the real growth opportunity is to add more golf courses and that was also indicated as the plan at the time of the IPO. Unfortunately, no acquisitions have been made. The  parent company has plenty of golf courses, so there is logical supply. I can only guess that they have been unable to raise financing to do this. As I said it is just a guess. When the Korean private equity firm (MBK) bought the parent, I was hoping that they would be a catalyst but so far nothing. The yield is still nice and the business is relatively steady when looked at on an annual basis (on a monthly basis, bad weather can severely impact performance but this tends to be compensated by good weather months), so I guess we jus tcontinue to clip the coupons whilst waiting for a value creating catalyst.

Vested

(26-09-2017, 03:55 PM)Squirrel Wrote: Its a pretty long but really informative piece of research report. Given it's company sponsored report, would that give more credence to the part mentioning plans of purchasing 25 golf courses at 5 golf courses per year? That should bump up dividends if it really happens.

Wouldn't the contrary be true instead? ie. How much credence is there in a "sponsored report"? Granted that this seems to be directly paid, rather then indirectly (I use your investment banking services, you give me favorable reports through your brokerage), and so actually making it not much different from majority of other "independent" brokerage reports.

P.S. I think it would be fine to treat the report as a "factsheet" and try to ignore all others that try to do projections, just my personal opinion anyways.