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Ascott Residence Trust Brings Home Higher Distributions

ascott residence logo Ascott Residence Trust (SGX: A68U), or ART, which invests mainly in real estate and real estate-related assets which are used as serviced residences, rental housing properties and other hospitality assets, brought some succulent meat to the table.

For the third quarter of 2013 (3Q 2013), the revenue surged 11% to S$86.1 million mainly due to “contributions from 17 new properties acquired in the second half of 2012 and June 2013. The new properties are located in China, Germany, Japan and Singapore.”

The distributions to unit-holders surged 17% to S$30 million and the distribution per unit (DPU) grew 6% to 2.37 cents for 3Q 2013 compared with the same period last year.

However, the Revenue Per Available Unit (RevPAU) for the serviced residences fell from S$148/day in 3Q 2012 to S$133/day for the latest quarter. The 10% fall was mainly due to the “divestment of Somerset Grand Cairnhill Singapore, which had a relatively higher [average daily room rate] ADR, and weaker performance from Philippines and Japan.”RevPAU is obtained by multiplying the average daily room rate by its occupancy rate.

As of 30 September 2013, the gearing level stood at 41.1% with the effective borrowing rate at 3.2%. The weighted average maturity of the debt was at 3.4 years. The net asset value was at S$1.38.

Mr Lim Jit Poh, Chairman of Ascott Residence Trust Management Limited, the manager of ART, said: “Ascott Reit has delivered another quarter of strong Unitholders’ returns mainly because of our strategic acquisitions of quality assets mainly from our sponsor, The Ascott Limited. For three consecutive quarters in 2013, we achieved double-digit increase in Unitholders’ distribution. In October, Ascott Reit has commenced the strata sale of 81 apartment units in Somerset Grand Fortune Garden Beijing. The divestment will enable Ascott Reit to unlock value and reinvest the sale proceeds in higher yielding assets.”

A component stock of the Straits Times Index, Capitaland Limited (SGX: C31) has a 100% interest in ART’s sponsor, The Ascott Limited, which in turn has a 49.4% interest in ART. Therefore, effectively, Capitaland owns 49.4% of ART.  Ascott is the largest international owner and manager of serviced residences with more than 31,000 apartment units in Asia and in Europe.

ART operates in the hospitality segment and other hospitality real estate investment trusts (REITs) listed in the Singapore Exchange include CDL Hospitality Trust (SGX: J85) and Far East Hospitality Trust (SGX: Q5T).

ART last traded at S$1.30. The price-to-book ratio is at 0.94 and the distribution yield is at 6.98%, taking into account the latest declared distribution and the last three quarters’ distributions.

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