Distributions Up for Ascendas Hospitality Trust

Yesterday evening, Ascendas Hospitality Trust (SGX: Q1P) released its third quarter results for the three months ended 31 Dec 2013. Ascendas Hospitality Trust (A-H TRUST) is a stapled trust that focuses on building a portfolio of income-producing real estate assets for hospitality purposes.  Its ‘stapled’ nature simply means that it’s comprised of both the Ascendas Hospitality Real Estate Investment Trust (REIT) and Ascendas Hospitality Business Trust.

Currently, A-H trust’s portfolio consists of 11 hotels located across Asia with the majority (seven hotels) of its portfolio based in Australia and the rest spread across Japan, China and Singapore. The geographical source of the trust’s net property income is shown below:

Source: Ascendas Hospitality Trust earnings release

Source: Ascendas Hospitality Trust earnings release

The trust’s gross revenue stood at S$56.6m for the third quarter, an increase of 10.0% as compared to the previous year. Net property income rose in tandem, up 36.9% year-on-year from S$17.1m to S$23.4m. The top-line growth was a result of an improved performance from its Australian property group and new contributions from Park Hotel Clarke Quay in Singapore and Ibis Beijing Sanyuan in China.

However, it is worth noting that the trust’s net profit after tax actually decreased. Nevertheless, the income available for distribution and distribution per unit (DPU) increased by 33.2% and 3.90% to S$16.6 million and 1.61 Singapore cents, respectively.

As of 30th September 2013, the gearing ratio of the trust stood at 35.8%. Comparatively, other hospitality trusts listed in Singapore, like CDL Hospitality Trusts  (SGX: J85) and OUE Hospitality Trust (SGX: SK7), have a gearing ratio of 28.1% and 33.2% respectively. As seen from the figures, Ascendas Hospitality Trust is more highly leveraged than the other two trusts.

The weighted average debt to maturity of the trust is at 2.2 years. The effective borrowing rate was at 2.9% and the net asset value was at S$0.76.

Chief Executive Officer of the manager of Ascendas Hospitality Trust, Mr Tan Juay Hiang, commented on the quarter’s results: “The acquisition of Park Hotel Clarke Quay has improved the risk profile of our portfolio, stabilised the earnings and reduced our foreign exchange exposure. We are also pleased that Park Hotel Clarke Quay has recently won ‘Singapore’s Leading City Hotel’ award at the 20th Annual World travel Awards. Following the completion of refurbishment, we have seen an increase in revenue per available room (“RevPAR”) for the Australia hotels. We will continue to work closely with the hotel managers to enhance the performance of our assets.

The trust last traded at S$0.765, giving its units a price-to-book ratio just slightly above 1 and a distribution yield of around 7%.

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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.