There's a lot going on with this IPO.
First of all, you literally have the top hotel properties in Canada, if not from a historical vantage point, then at least from a modernized one.
I have the Legacy prospectus and am feeling fortunate to be in line for give-or-take 1000 units on an instalment basis when the thing closes Nov. 10th.
What got me interested in this REIT was watching the other Canadian hotel REIT (Cdn. Hotel Properties - HOT.IR) take off nicely after its IPO this year. Having heard a lot of noise about the launch of this Legacy Hotels REIT, I had the broker get the prospectus.
Here is the main + (plus) I see about this IPO: you can't get better quality in the hotel trade and their daily billing per occupancy is well over $100/room. Continental business travel is still hot and if Asian markets melt, there will be more Canada-U.S. travel, on the top-end. Also, with all these REIT's launching on $6.00/$4.00 instalments, you have the chance to watch it for 11.5 months, then exit if unhappy.
Here is the main - (negative) I see: the Globe & Mail today, Nov. 1, on p.2, quoted someone in Hong Kong saying "In what may be a precursor of trends in Canada, the # of Asian visitors to Hong Kong has dropped sharply, particularly from Japan." So, if high-end North American travel from offshore does tank out, the hotels in the REIT are going to look, unfortunately, like ghost towns. And there goes your income distribution to unit-holders, one of the stronger selling points with quality REIT's.
So, take your choice. I think my investment is for the long haul and I keep the colour glossy up on my wall of all the 10 hotels as a reminder that one is buying into 'Canada's legacy hotels.'
Your opinion? |
