I cannot remember when was the last time IREIT Global made an acquisition.

It was such a long time ago. So long that I forgot when. But fret not the management finally made an acquisition. This time they have acquired a portfolio of Spanish properties from Blackstone‘s Spanish REIT Corona Patrimonial.

Is this a good acquisition? Let us find out.

From my High Yield Dividend Stock Tracker, IREIT Global gives a 6.8% dividend yield.

That does not tell the whole story because they retained 10% of their income available for distribution (even though I could not detect why they retained it. Cash is the same, debt goes up).

Together with a rather low debt to asset, long debt to maturity of more than 6 years, very low cost of debt, I like to see how this acquisition can augment their portfolio. The black mark is that due to the exchange rate, dividend yield has come down a fair bit.

This is also the first deal done since CDL came on board to own 50% of IREIT’s manager and 12.4% of the REIT.

A Spanish Portfolio

This acquisition was structured in the form of a joint venture between IREIT Global’s parent Tikau Capital Management and them.

REIT’s share of the joint venture is 40%. Tikehau will take the other 60%. Tikehau has given the REIT a call option within 18 months to purchase the other 60% of the portfolio. If Tikehau sells to a third party, they can exercise a “Drag-a-long” option to IREIT to sell their portion of shares too, but not less than NAV. If Tikehau does not exercise the option, the REIT can “Tag-a-long” on the deal as well.

The interesting thing is that it says CDL fully supports the acquisition and extended to IREIT a EUR 32 mil bridging loan.

Somehow seeing this bridging loan gives me the feeling they have to end this deal fast.

From this paragraph, it looks that way.

This acquisition is one-tenth the size of its current portfolio.

The portfolio consists of 2 buildings in Madrid and 2 in Barcelona. They are all multi-tenanted.

You can view some snippets of the portfolio in this video here.

The occupancy of the Barcelona is low. I wonder whether the manager sees this as a portfolio they can improve upon.

If it is so hard to rent out by previous owners, what are the chances we do better than them?

Since this is only one-tenth the size of the portfolio, I do not expect it to have a great diversification impact.

Clece, a cleaning company with footprints in UK, Portugal, and Spain, and Digitex are their key tenants.

Past Occupancy

The occupancy for Lumina and San Cugat Green is not ideal right now. I wonder why Corona Patrimonial could not increase the occupancy.

Here are some of Corona Patrimonial historical occupancy figures:

The occupancy looks really volatile. Delta Nova improved massively from the past while Illumina and San Cugat occupancy has declined.

Management has said the passing rent is lower than market rent. Thus, if they could improve the occupancy or re-leased the property at market rent, there will be some upside.

However, judging by how volatile is the occupancy, I wonder if shareholders would like this to be added to their portfolio.

Method of Financing this Acquisition

The size of the consideration to IREIT should be around EUR 57.6 mil.

Part of this EUR 57 mil will be financed by the EUR 32 mil bridging loan first. This loan looks to be pretty high-interest relative to IREIT’s current loans. There is another EUR 25 mil of loan, probably on the Target Entities level which is eventually attributable to IREIT.

I suspected that this loan at the Target Entities level is amortizing, which means you are paying part of the principal.

IREIT has 2 different ways of financing the acquisition.

The first way is to fully finance with a CDL Loan and IREIT’s share of the mortgage financing.

The second way is through a 62.7 mil equity issue at an illustrative issue price of S$0.7979. They will also take on their share of the mortgage financing.

If you ask me, it is weird that you would issue equity at last week’s closing price.

The document is short of details.

If they are using that illustrative price, I wonder if they can get a tight placement instead of a rights issue. Usually, the illustration communicates what they would like to do.

The way they structured this seem to indicate a preference for a placement, lightly discounted offering.

This might be a reason why they could only take 40% of the portfolio instead of 100%. A rights issue could have taken the whole thing.

In any case, if it is fully funded by debt, the acquisition is accretive. If the second scenario is selected, the dividend per unit does not improve.

In fact, the DPU is lower after the equity issue.

I ran some of the figures and it does indicate this is correct.

Can the Cash Flow be Improved?

If we take the difference between distributable income of EUR 26.72 mil – 25.15 mil, we get a distributable income EUR 1.57 mil. Based on an equity of EUR 32 mil, that is about a 4.9% yield.

I could not figure out the net property income yield if the portfolio of properties is not leverage due to the lack of information.

They do provide the discount rate used to value the property. The discount rate is usually higher than the NPI yield. The higher the discount rate, it means the investor is looking for a higher return to compensate for the risk.

I was able to find the latest interim six-month financial statement and balance sheets.

The annualized net operating profit in 2018 was EUR 4.76 mil and in 2019 was EUR 4.15 mil. We add back the annualized depreciation & amortization of EUR 2.2 mil. The annualized operating cash flow should be EUR 6.35 mil. IREIT’s attributable operating cash flow should be EUR 2.54 mil

If the acquisition is done at EUR 138 mil, the NPI yield is 4.6%? That looks a bit low if you ask me.

Corona is paying a total of EUR 4 mil in interest expense on EUR 105 mil in loans so the interest rate is about 3.8% a year.

I suspect only EUR 52 mil is attributable as mortgage financing loan, with IREIT’s share being EUR 21 mil. If the loan rate is 3.8%, then IREIT’s interest expense is EUR 0.8 mil.

We get a net free cash flow after interest of EUR 2.54 mil – EUR 0.80 mil = EUR 1.74 mil.

EUR 1.75 mil is pretty close to the EUR 1.57 mil in available distributable cash flow. The difference is 10% and pretty close to the management fee paid in cash.

I think the question is whether they could:

1. Improve the occupancy. This might boost EUR 0.5-0.6 mil
2. Re-leased at higher market rent
3. Re-finance 3.8% bridging loan at less than 2%. This might boost EUR 0.375 mil

Despite doing this, based on my math, it would just be about under the current DPU of EUR 3.59 cents.

In other words, if IREIT took the equity raising route, it will still be not accretive.

If they re-finance the loan and keep leverage above 40%, this would be accretive.

Why Can’t Corona Patrimonial Improve it?

Corona Patrimonial does not look like a company that has been around for a long time. It looks like it was set up to purchase properties that are in distressed in 2015. Other than these 4 properties, there were at most 6 properties in this portfolio before they were sold off.

I noticed this on Corona’s home page:

The Company, via its subsidiaries, has acquired office buildings in Spain at a good point in the cycle, and expects to benefit from the recovery of the property market. The Spanish market is improving in economic terms and seeing a change of cycle; this is reflected in macroeconomic indicators and is a sign of recovery.

The Company has a board of directors comprised of three directors whose areas of professional experience -including participation in processes for the acquisition of assets in Spain and abroad, the management of real estate companies or the implementation and supervision of management platforms in those companies- complement each other.

The Group’s leases are based on the selection of clients with economic solvency that provides security and visibility of long-term income, the aim being to increase the current occupation percentage.

The assets are located in the main business and consolidate offices areas of Madrid, Alcobendas and Barcelona (Sant Cugat del Vallés and Espluges de Llobregat) and have an average age of less than 14 years.

They probably have 4 years to stabilize this portfolio but from what we see, I wonder if it is improving (I cannot read Spanish btw).

Some More Information on Corona Patrimonial

Corona is listed on the stock exchange. Here is some information I could gather:

This is likely Blackstone’s way of exiting this distressed deal (when they listed the company). The way they sell off this portfolio part by part reminds me of my MIIF heyday.

After this sale, there will be no more of this listed entity.

Tikehau and IREIT will purchase these assets at EUR 138 mil. Based on this information, last year, it was probably valued at EUR 146-149 mil. Currently, the REIT is traded at EUR 100 mil.

So through this sale, the listed REIT can wind up closer to their net asset value.

Summary

Whether this is a good deal for shareholder or not will depend on 3 factors always

1. Whether the portfolio is operationally sound or provides upside for improvement, or the place where the property is situated is going to experience low to high employment, population growth, better demand, and supply dynamics
2. The quality of the manager
3. The valuation

You can read more about this here in an article in my REIT Training Center.

IREIT’s current portfolio is rather concentrated tenant wise. Thus adding a portfolio of multi-tenanted does help, if they eventually also buy the other 60% of the portfolio.

But when I look at the volatile nature of the Spanish portfolio’s occupancy from 2014 till 2019, I wonder if IREIT will get their hands full managing it.

There could improve the cash flow but you wonder what could they do that the previous owners could not.

An equity raising would not be accretive, even if debt is refinanced, and rental occupancy is improved to a certain extent.

I cannot determine if the portfolio is a bargain or not. On Corona’s 2019 interim statements, the net equity is listed as EUR 131 mil. Not too long ago it was nearer to EUR 145 mil. A lot of the valuation is determined by whether the properties are well leased out.

This deal feels underwhelming. Unless the manager can explain what a blue ocean the demand and supply dynamics are in Madrid and Barcelona. For well-informed readers, you might have a different perspective of this.

If the demand and supply dynamics, and there is a shift in the Spanish economy, this deal might be more worthwhile.

I write more about REITs in my Learning about REITs section. It is free.

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Frasers Logistics and Industrial Trust (FLT) announced that they will be merging with Frasers Commercial Trust (FCOT).

The benefit of this deal looks rather straightforward to me, but I thought sometimes it is good to exercise some investing brain juice. If you failed to use it, you will lose it faster.

This article will be rather short (hopefully).

How the Acquisition Will be Done

The merger will be done by FLT acquiring FCOT through a combination of issuing new FLT shares for FCOT and paying cash to FCOT shareholders.

For each FCOT shares, FLT will swap 1.233 FLT shares at an issue price of S$1.24. FLT will also pay FCOT shareholders a sum of S$0.15 per share in cash.

The entity will be managed by FLT’s management team.

The joint entity will then acquire the other 50% interest of Farnborough Business Park from Frasers Property Limited that FCOT did not own.

This deal looks straightforward until I considered this acquisition. Was it meant as a sweetener so that this deal will appeal to both FLT and FCOT’s shareholders?

Let us examined.

FLT and FCOT’s Current Situation

Here is how both company looks like before this acquisition. The dividend yield is pretty similar. What is not shown here is that FCOT is less leveraged and also closer to fair value (in terms of Mkt Cap/Total Equity) than FLT.

Deals like these may benefit both parties or one side. The way I would look at this is to assess from both FLT and FCOT’s perspective to see if each of them got the better part of the deal.

FCOT Unitholder’s Perspective

As an FCOT unitholder, you will now be an FLT shareholder.

Suppose you own $100,000 worth of FCOT units. You will have 59,880 units.

After this deal, you will own 73,772 FLT units at $1.24. Your $100,000 becomes only $91,478.

Sounds like a bad deal at this point. But wait.

For each FCOT units, FLT will pay you $0.15 in cash. So for this unit holder, the difference between $100k and $91.5k is $8.5k.

This is equivalent to $0.142 per unit. So this $0.15 per unit is to make up for the difference.

As a unitholder, you swapped a portfolio with a lower dividend yield. At this point, on a long term basis, it does not make a lot of sense as an FCOT shareholder.

Perhaps that is where the Farnborough Business Park acquisition comes in. This will boost the DPU of FLT so that it make sense.

FLT Unitholder’s Perspective

From the FLT Unitholder’s perspective, they were diluted, but some new investors were brought on board, together with a portfolio of assets.

We can treat this as a placement for new shareholders. What you wish to know is whether this acquisition is accretive to the DPU or dividend yield.

Unfortunately, the information on the acquisition is very short in the announcement. I could look up FCOT’s existing Farnborough Business Park’s results to see how much additional income the acquisition will bring in.

No matter how I think the effort is not quite worth it. FLT says that this acquisition of FCOT and asset acquisition will be accretive.

Why FCOT Needed This Deal

FCOT’s current portfolio is more concentrated.

Their WALE is part long part short.

However, what many feel is that the REIT is not sturdy enough. The short leases are in Singapore. The rent is close to the market rent and demand Dynamics is ok but not good for this segment.

Merging and exchanging for this FLT portfolio reduces the vacancy impact of a single FCOT property. When HP left Alexander Technopark, the vacancy created uncertainty over whether FCOT could successfully leased out a large part of the spaces.

Google eventually took over. And the Microsoft terminated their long 5 year lease.

Numbers-wise, FCOT will be converting to a REIT that is quite above its book value. Some will view it as exchanging a fair value company with a pricey company. FLT gearing is higher.

The yield looks almost equal, so you do not lose much income.

But whether this is a good deal, you cannot just evaluate the dividend yield.

My assessment is always based on

1. the economy/ market outlook for their operations going forward
2. valuation
3. management quality

You can read about these 3 criteria in this article.

This deal I feel helps their operations by providing more diversification and risk management. Valuation will improve due to greater stability. I don’t think we can detect any significant difference in management.

Why FLT Needed This Deal

Honestly other than currency diversification, I do not see many advantages.

FLT is already diversified across Euro and AUD. FCOT is mainly SGD and AUD. Not much significant help there.

What works for both is that if they have the size, they can have more capital to do development, AEI, step by step acquisition without impacting debt to asset ratio and distributable income too much. With scale, they can also get a better deal when it comes to financing.

Numbers-wise, FLT shareholders is acquiring a portfolio that yields almost the same. This is like a placement of their shares to the third party. They get diluted but gain an asset with similar net property income.

The gearing of FCOT is much lower after the sale of market Street. We can say this is attractive to FLT in that they acquired a less geared portfolio.

This is one of the reason that they could gear up and pay the shareholders $0.15 in cash. Fcot shareholders can take this as a special div or capital reduction to you, then purchase of FLT shares.

In terms of the three evaluation category, FLT perhaps gets poorer in their exposure to an office portfolio that do not have visible upside, but the new portfolio looks cheaper and more asset trading potential, management is the same.

Summary

Ultimately, this deal might be to just get bigger.

The main advantages are:

1. Save on personnel
2. Potentially easier in raising capital and at a more attractive borrowing rate
3. Greater room for AEI and development without impacting existing DPU

For both sets of unitholders, they will have to think. There are unitholders who held both REITs. I think this does not change much. In fact, this synergy might be better for both.

If you own only one REIT, the reason you did not invest in the other now may be that it is unattractive to you. This could be due to valuation or the quality of the portfolio or the manager.

If that is the case, you might not like this deal. The appropriate action is to see if you want to sit with this for a period of time to assess. If not you should just sell it because this is not what you wish to own.

Do Like Me on Facebook. I share some tidbits that is not on the blog post there often. You can also choose to subscribe to my content via email below.

I break down my resources according to these topics:

1. Building Your Wealth Foundation – If you know and apply these simple financial concepts, your long term wealth should be pretty well managed. Find out what they are
2. Active Investing – For the active stock investors. My deeper thoughts from my stock investing experience
3. Learning about REITs – My Free “Course” on REIT Investing for Beginners and Seasoned Investors
4. Dividend Stock Tracker – Track all the common 4-10% yielding dividend stocks in SG
5. Free Stock Portfolio Tracking Google Sheets that many love
6. Retirement Planning, Financial Independence and Spending down money – My deep dive into how much you need to achieve these, and the different ways you can be financially free
7. Providend – Where I work doing research. Fee-Only Advisory. No Commissions. Financial Independence Advisers and Retirement Specialists. No charge for first meeting to understand how it works

There is a ship in trouble and everyone seem to be talking about it.

The Edge Magazine ran an article titled Eagle Hospitality Trust could get wings clipped as key asset The Queen Mary sinks into disrepair.

Basically, Eagle Hospitality Trust (EHT) a REIT with full-service hotel assets in the United States owned a ship called The Queen Mary. It is an old ship. If you multiply Kyith’s age by 2 and it will still be older than Kyith.

Anyway, the ship is moored in the harbor and tourists, locals can stay in the 347 rooms and have fun there.

The Queen Mary Long Beach was acquired in Apr 2016 by Urban Commons and this year sold into Eagle Hospitality Trust.

There are 347 rooms, 1600 parking lots, 80,000 sq ft of meeting room spaces.

Owning the ship is one thing, but another aspect is the land surrounding where the ship is anchored.

The City of Long Beach holds the land title and lease it to Eagle Hospitality Trust (EHT) for 66 years. This land has the potential to be developed or subleased for other purposes.

Urban Commons (UC), EHT’s sponsors, lease the ship and the areas around, from EHT as a master lease (officially Urban Commons Queensway LLC).

The master leased tenure is 20 years + 14 years. The ship is moored at an X flood zone area which means there is minimal to moderate chance of flooding in this region.

The majority of the rent is fixed, with escalation, plus a variable component computed as 8% of the Gross Operating Profit.

The Queen Mary is a significant contributor to EHT’s bottom line and net asset value.

Unlike the rest of the hotels in the trust, Queen Mary is operated independently and the operator is Evolution Hospitality, a subsidiary of Ambridge (which operates the other EHT hotels)

In Nov 2016, Urban Commons and the City of Long Beach started a large scale improvement plan addressing both structural items at the property as well as repositioning and reopening unused public and revenue-generating spaces. This includes meeting spaces, restaurants, and attraction venues.

A total of US$23.5 mil is spent by Urban Common before the IPO. This was matched by US$23 mil spent by the City of Long Beach.

The money is spent repurposing of unutilized public spaces and structural works.

There was disruption during this period to both business and therefore, revenue. However, as work slowly competes, the revenue and profit margin slowly got better.

EHT’s purchase consideration was US$ 139.7 mil. The valuation is US$159.4 mil. (looks like we got a steal there, or….)

What is the Fuss About?

In the Edge Article, the City of Long Beach’s economic development director John Keisler said the operator (Urban Common) may lose its 66-year lease agreement if it fails to meet its obligations.

Since 2016, both the City of Long Beach and Urban Commons have sunk money into repairing it. However, inspection done by Independent inspector Edward Pribonic has shown that the condition of the ship is getting worse.

The article also states the following:

Three years ago, Urban Commons is reported to have taken on the lease despite a marine survey that unveiled that the ship’s deteriorating condition was “approaching the point of no return”.

 According to that report, the total cost of ship repairs could range from US$235 million ($320 million) to US$289 million. In addition, it estimated that the work would take approximately five years to complete, with some 75% of repairs deemed “urgent”.

Keisler keep sending a letter to Urban Commons’ CEO but he had yet to respond.

Now if EHT loses this 66-year lease, it will effectively means US$159 million (the Queen Mary’s valuation) goes up in smoke.

Thus there is volatility in the share price.

How Should We Look at This

This is a tough cookie and in investing, we have to make decisions like these (so it makes you wonder how passive this income is).

The thing we need to ascertain is whether this is a long term problem or not. My take is, I don’t think it is.

But I cannot be totally sure, like most of the things I come across.

The first thing I think about is just write off the whole ship and see whether the valuation is attractive.

How the Financials if we Take Out Queen Mary

In the 2nd quarter result, EHT’s distributable income records about 36 days of operation. If we annualized it, we get around US$56.7 mil. Queen Mary is forecasted to contribute US$12.5 mil in rental income for FY2020.

This works out to be US$44.2 mil.

With 868 mil outstanding shares, the dividend per unit after excluding Queen Mary would be about 5.1 cents. The dividend yield based on the last share price of US$0.545 is 9.3%.

Hospitality properties tend to have more volatile rental earnings because a large part tends to be based on revenue. Thus, they should command a higher yield for margin of safety. Perhaps 7-8%.

Given the overseas property and difference in currency, we can add 1% to it.

Thus 9.3% in dividend yield looks fair.

The other aspect is the net asset value.

EHT has a total asset of US$1353 mil and total liabilities of US$579 mil. Out of this liability, US$497 mil is debt. Cash comes up to US$67 mil. The investment property comes up to US$1200 mil

Queen Mary is last valued at US$159 mil.

The debt to asset of the whole trust is 48%. If we take out the cash then it’s 46%. If I don’t take all the liabilities but only interest-bearing debt, the debt to asset is 41.6%. From what I can see, Queen Mary was not used as a collateral to secure any of EHT’s loan.

But from the prospectus, there should be loan covenant should the trust breach certain debt to asset ratios. This will eat into the dividend. There is also the need for a REIT to try their best not to be overly leveraged.

The revised NAV is US$0.70. Thus EHT is currently trading at a 22% discount to this NAV.

Based on this, it is a bet whether someone is making a mountain out of a molehill.

Urban Common may have Realize this is Bigger Than

What they originally anticipated. Keisler explained more about the situation in an Oct 10 article.

Keisler said Urban Commons has pushed back the timeline as it works to navigate the complicated regulatory process, but the company has been clear that it intends to move forward with the project.

“One of the challenges in the short term is they’ve realized how complicated and expensive the ship is and how complicated the development environment is,” he said. “But they’re indicating that they’re still all in, and now they’re looking at how they can make it work.”

Sometimes I feel that folks like Keisler are trying to put this in the news so that Urban Commons can expedite things. I wonder how this would look on his resume if this whole thing fails on his watch. It is as if he is trying to show his guys or the people that “Hey, look! At least I am trying to do something to expedite the thing!”

After the update yesterday evening (28th Oct), I am still very confused about what is Mr. Keisler trying to do. Is it because Urban Commons is not doing a good job keeping up with the repair timeline or they have a change of heart and Mr. Keisler would like some public pressure to keep them obligated to go through with this.

Responsibilities of EHT and Urban Commons

How much contingent liabilities could EHT suffer from?

Here are some information on termination of agreement gathered from the EHT IPO Prospectus:

Termination Events

The master lessor and lessee can both terminate the agreement, in the event of the following:

1. material damage to the premises or
2. the whole or part(s) of the premises is condemned by any public or quasi-public authority, or private corporation or individual, having the power of condemnation so as to make it impracticable or unreasonable in the Master Lessee’s reasonable opinion to use the remaining portion as a hotel of the type and class immediately preceding such compulsory acquisition

EHT, the master lessor can terminate in the following conditions:

1. EHT sells and assigns its interest of the premises and pays the master lessee a termination fee equal to the fair value of Master Lessee’s remaining term
2. In the event of default of rent
3. In Queen Mary case, termination of the ground lease

It feels to me, that UC can terminate this master lease agreement if the City of Long Beach condemns them.

The question is after that, the ship is returned to EHT. Is EHT liable for anything else (such as their commitment to repair the Queen Mary)?

This is an area that shareholders can seek clarification from management.

Update on 28th October: Eagle Hospitality Trust provided some answers to the queries by SGX. In the answers, EHT updated that should Urban Commons break the master lease, the amount of repair that EHT is liable for contractually is US$7 million.

That is a pretty manageable sum.

Someone at Valuebuddies also posted an update from Kiesler to the Acting City Manager of Long Beach on the progress of Queen Mary projects and Long Beach Cruise Terminal Domes. This was sent in September 2019. You can read it here.

It contains much information about the background of these repairs, what was completed, what is in progress and how much it cost.

The total projects that were completed and are in progress is valued near US$23 million.

In the above section, we can see what the inspector has identified as critical and have asked the lessee (Urban Commons) to start scoping. It comes up to US$7 million.

In the 2 slides above, we are able to see the projected cost of the individual projects and the actual cost.

Looking at this brings back some haunting memories of my old engineering life. We can see there is a fair bit of cost overrun. This would probably be what Mr. Keisler mentioned as a more challenging task than anticipated.

I am no expert but based on this, it looks like this is work in progress in an effort to ensure the ship does not sink. While there are many red areas, I guess this is what the repair is supposed to achieve.

Here are some of my conclusions:

1. The CAPEX required is not to get the ship into sailing state. Rather it is to ensure that the whole thing is safe
2. There is a lot of work to be done
3. Majority of the work is work-in-progress or completed
4. There are some cost overruns
5. These should be funded by the existing CAPEX of US$23 mil. Not sure who will bear the cost overrun. Based on my project management experience, costs should be shared by the vendor and the client. In this case the City of Long Beach and Urban Commons
6. Urban Commons have just received money from the IPO of EHT. They should still have funding for this
7. Based on the agreed work-to-be-done it does not seem like it will come up to US$200 mil.

How Eagle Hospitality Trust Could Recover or Die

In investing is not just about looking at things in a dualistic manner. It is thinking through what are the outcomes and how we can benefit or risk manage our position.

So here is how I look at things.

I think the repair job keeps progressing it should be OK. I am not certain Queen Mary is going to be a good experience. If you read the next section, I wonder if Evolution Hospitality, a subsidiary of Aimbridge, the operator of the hotels are the kind of folks you want to provide good customer experience.

The one who appointed them should be the sponsors. At this moment, these issues would result in investors giving the management negative points. And management is one of the key factors in assessing whether a REIT is quality or not (along with the future business, economic outlook of the area of operation and valuation)

I lean towards that EHT is not a good long term hold there.

Next, we think about the short term. How would this play out?

If the Queen Mary defaults, and EHT loses the 66-year land lease, then we can write off that part of the value and rental income.

Share price might spiral when there is dilution without accretive acquisition.

Even without the contingent liability, EHT is also very close to the 45% gearing limit. To be more sound, they might need to call for a rights issue to deleverage. That would kill the share price as well.

In this scenario, management would not be seen in a good light. It will be challenging to get any form of share price support.

The above scenario at this point seems unlikely to me.

The opposite is the share price will stage a recovery. But to what level? This will depend.

EHT’s share price is at a stage where people are asking a lot of questions about it and they are not giving good answers. Without strong support from investors share price will continue to languish.

Over the long term, even if this issue is behind us, the hotels in EHT would have to show some great results. This is to give investors confidence this is not a scam REIT or someone dumping assets into it.

Good results leads to share price recovery. This would make acquisitions easier. This is a favorable scenario.

So How is the Actual Condition of Queen Mary?

I have no idea. The air ticket to America is a bit pricey plus I do not have much leave days.

But if you are interested, take a look at TripAdvisor and see what the visitors say.

Here are some interesting ones:

I was a little bit anxious about staying on the ship. I’d heard reports that it had been ruined a bit and lost some of it’s character but that’s not the case at all. You actually feel like you have stepped back in time as you walk on board.
Sir Winston’s Restaurant is very good and the bar is adequate and there is plenty to see on the ship in the way of history. I didn’t take a guided tour but the ones I happened upon seemed very informative.
The bed was super comfortable but the room was not very soundproof. We endured the ecstasy of a couple in the next room for the best part of a minute. We almost applauded.
I think you could describe the stay as an experience rather than out and out comfort but we did enjoy the stay.

Sep 19

The Queen Mary was a beautiful ship, especially the elegant wood used everywhere. A gorgeous piece of history has descended to chairs with holes, duct taped floors, dirty carpeting. I only hope that future plans for this stunningly appealing ‘idea’ (who doesn’t like the ‘idea’ of visiting wonderfully restored parts of history?), are to completely refurbish the entire place. That would be a great thing!

Oct 19

Great experience! – Check in very smooth. We stayed in an outer stateside room and what you would expect from the time very traditional fittings and decor. Room spacious and quirky. The ship itself steeped in history. Observation deck great for a drink. We ate in Winston Churchill restaurant and couldn’t have been treated better. Beef Wellington was amazing. Celebrated wedding anniversary and they brought cake, chocolate strawberries and decorated chocolate which was a lovely surprise. Check out was seamless.

– Oct 2019

No hot water and staff lied to me about it – At check-in I inquired about upgrading to a harbor view room. I was told I could for $20 a day. I gladly paid the $20 and upon arriving to my room discovered that there was no hot water. I went back to the front desk to ask about this and was told all cabins in my section had no hot water and that they’ve been working on it all day. The next morning on before checking out we left our room and overheard an employee asking on the radio when they are going to start fixing the water because people have been asking him. So it turns out they never had anyone working on it and lied to me at the front desk when I went back to inquire about it. On top of that the front desk agent failed to even mention to me there was no hot water if I upgrade and just allowed me to upgrade to presumably boost her numbers. This is insanely bad customer service and I would urge everyone to not stay here.

The no hot water can be excused because it’s an old ship and stuff happens. What bothers me is that the lady at the front desk never once thought to tell me that there was no hot water if I upgrade and pay more and also lie to me about it being fixed.

Oct 19

I will say first that if you want to experience staying on the ship you should. But we found the bed was super small and the walls were super thin. The room was clean, but the shower was too short, which I feel like is more the era but worth knowing. We also got so many hidden fees it wound up costing quite a bit more than the original quote. It was unique and the ship itself is very beautiful and full of so much interesting history.

Oct 19

The general feeling you get is that this ain’t the best functioning hotel, this ain’t the best experience when it comes to hotel stay and people tend to really like visiting it and staying there.

Ok that is enough blabbering about this ship.

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