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Ascott Residence Trust’s First Quarter Highlights

Ascott Residence Trust (SGX: A68U), the hospitality REIT that’s under the corporate umbrella of CapitaLand (SGX: C31), announced its first quarter results on 24 April 2014. The trust currently operates 82 properties in 32 cities around the world and have total assets worth S$3.7 billion.

Distributions suffer even with revenue increase

For the quarter ended 31 March 2014, the trust had experienced a 16% year-on-year growth in revenue to S$80.4 million that came on the back of contributions from its acquisitions in 2013. However, due to a one-off currency gain in the year-ago quarter, distributions for the first quarter of 2014 had dropped by 3% to only S$26.7million. In terms of the REIT’s distribution per unit, it had even suffered a 22% drop from 2.25 cents to 1.75 cents.

The trust runs on three different types of revenue models. 59% of its first quarter revenue is obtained from properties under management contracts; 21% came from similar management contracts that also have a minimum guaranteed income component; the remaining 20% portion comes from properties under master leases.

The trust’s gearing had increased slightly from 34% in the last quarter to 35.9%. Its effective borrowing rate is around 3% for the quarter, which can be considered as a rate that’s really competitive. Meanwhile, the REIT’s net asset value per unit had dropped from S$1.37 in the quarter ended 31 De 2013 to S$1.36. As its operations span the globe, its debts are also raised in different currencies with borrowings mainly denominated in the Japanese yen, Euro and Singapore dollar.

Most of the REITs’ assets are located in Singapore, Japan, China, France, and the United Kingdom; those five countries are collectively responsible for 77% of the REIT’s total asset value.

What’s next for Ascott Residence Trust

Ascott Residence Trust continues to have a positive view on the global economy. Armed with new funds from a Rights issue that took place last December, the REIT has been actively looking for more acquisition targets. Furthermore, more asset enhancement initiatives will be taking place this year.

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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 Stanley Lim doesn’t own shares in any companies mentioned.