What Investors Need to Know about Accordia Golf Trust’s Upcoming Initial Public Offering

If you have not heard about it yet, Accordia Golf (AG) Trust is one of the latest business trusts that’s looking to list in Singapore following Frasers Hospitality Trust’s proposed spin-off from Frasers Centrepoint (SGX: TQ5)

With its unique business assets (golf courses!), AG Trust stands out amongst other business trusts and real estate investment trusts in Singapore; there are exceptions – for instance, Asian Pay Television Trust (SGX: S7OU) owns cable TV systems in Taiwan and Hutchison Port Holdings Trust (SGX: NS8U) owns ports in Hong Kong and China – but these trusts typically own residential, commercial, and industrial properties.

This might make investors curious about what exactly is AG Trust all about. If you belong to that group, read on!


AG Trust is a business trust that invests in and owns a portfolio of established, income-generating golf courses and golf course-related assets.

The trust’s initial portfolio will comprise of 89 golf courses located across Japan; they are found mostly in three of the largest metropolitan areas in the country (86% of the golf courses’ combined value is found in the following three metropolitan areas), namely, the Greater Tokyo Region, the Greater Nagoya Region and the Greater Osaka Region.

Interestingly, as of 31 December 2013, the golf courses that would be injected into AG trust has more than 146,000 loyalty card members; these members form the “core customer base” of the trust’s golf courses. The table below shows some pertinent statistics about the operations and visitor numbers for the trust’s golf courses.

  FY2011* FY2012 FY2013
Revenue (S$, million) 686 662 657
Net profit (S$, million) 65 71 74
Total number of visitors (million) 5.43 5.45 5.61**

*FY2011 stands for the financial year ended 31 March 2011, so on and so forth
**Total number of visitors for the nine months ended 31 December 2013 stood at 4.51 million

Source: Accordia Golf Trust preliminary prospectus

Use of proceeds and valuation

AG Trust is created through a restructuring exercise by its Sponsor, Accordia Golf Co., Ltd. Accordia Golf is a leading operator of 135 golf courses in Japan and is listed on the Tokyo Stock Exchange.

Basically, upon its listing, AG Trust would purchase some of Accordia Golf Co.’s golf courses (the initial portfolio of 89 golf courses) for a total sum of S$945 million based on its maximum offering price (more on that to come shortly).

According to a preliminary prospectus filed with the Monetary Authority of Singapore, AG Trust will sell 782.025 million units at the price range of S$0.97 to S$1.00 (minimum and maximum offering price, respectively) per unit.

Based on the maximum offering price, the acquisition of the 89 golf courses would be satisfied primarily by S$628 million in cash while the rest of the purchase would be paid via an issue of AG Trust’s units to Accordia Golf. Upon the completion of the trust’s IPO, Accordia Golf would emerge with a 28.85% ownership stake in the trust.

The starting date for the application is 22 July 2014 and will close on 24 July 2014. AG Trust will then commence trading of its units on 1 August 2014. It’s good to note that the dates mentioned are all subjected to change.

Based on the total number of outstanding units (1,099,122,000) immediately after the offering, the net asset value per unit works out to be S$0.92, translating to a price-to-book (PB) ratio of 1.02 or 1.09 depending on the actual offering price itself.

For distributions, AG Trust also crunched the numbers and came up with a forecast of S$0.062 per unit for the period between 1 August 2014 and 31 March 2015. Based on the trust’s maximum offering price, that works out to be an estimated yield of 6.2%.


A prospectus will usually will spell out many competitive advantages that the company in question might possess and that’s to be expected if the company wants to be listed successfully; if its strong points aren’t made obvious, how would investors gain any confidence in the business?

It’s no exception in AG Trust’s case so here’s a few of the trust’s strengths as touted by itself:

1) It’s backed by a new asset class that’s not found in Singapore’s share market yet -golf courses.

2) It has a stable portfolio which translates into stable distribution payouts going forward.

3) Interestingly, an ageing population in Japan is considered by the trust to be a favourable demographic trend for it; that’s because an increase in older folks would mean more people having more time for leisure activities, with golf being one of them.

4) There are high barriers to entry when it comes to building golf courses due to the high costs involved.


And just as surely as competitive advantages for a company can be found in its prospectus, risk factors would also definitely be included. Here are some of the more important and probable ones I found:

1. Golf courses are cyclical and sensitive to natural disasters especially with its open, highly-manicured fields.

2. There are currency risks with the trust given that it’s reporting in Singapore dollars even though its business activities are conducted predominantly using the Japanese yen.

3. Despite having high barriers to entry, there’s still fierce competition from other golf course operators in Japan.

Foolish Summary

So, here’s a quick round up of what I’ve discussed above: 1) AG Trust will debut in our shores on 1 August 2014 (this might be subjected to change); 2) investors are getting a forecasted yield of 6.2% based on the trust’s maximum offering price of S$1.00 per unit.

On a final and important note, despite the trust owning some rather unique assets, its top-line has been on a downward trend in terms of Singapore dollars. One would need to ascertain if the trust’s management team can help turn that trend around after the IPO.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor James Yeo doesn’t own shares in any companies mentioned.