Aggressive acquisition spree brings Ascott REIT dangerously close to maximum debt limit

Its leverage stands at roughly 44%.

Ascott REIT’s appetite for overseas properties intensified further in the third quarter, with the trust snapping up eight properties worth a whopping $500m in just three months.

According to Moody’s, Ascott REIT acquired six properties in Australia, Japan and the US and the remaining 40% interest in two Japan properties in Q3, while the REIT has also divested six housing properties in Japan for $52.6m (JPY4,475m).

“As a result of these recent acquisitions, the REIT's leverage increased in 3Q 2015 to approximately 44% adjusted debt / total deposited assets, which is close to the 45% rating downgrade trigger,” Moody’s said in a statement.

"While we note the increase in leverage, which is currently at the high end of our rating parameters for its Baa3 ratings, we expect the REIT to manage its leverage ratio down to approximately 42%-43% adjusted debt/total deposited assets over the coming 12 months. Furthermore, we expect its EBITDA interest coverage ratio to continue to remain consistent with its current ratings at above 3x level," Moody’s added.

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