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How Did Ascendas Hospitality Trust Management Fare In Its Latest Quarter?

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Ascendas Hospitality Trust Management (SGX: Q1P), which owns 12 hotels in eight key cities across Australia, China, Japan, and Singapore, released its first quarter results yesterday and saw gross revenue grow 11% over last year to S$53.3 million. Most of the hotels in the trust’s portfolio are located in Australia; in Singapore, the trust owns Park Hotel Clarke Quay.

For the three months ended 30 June 2014, growth in gross revenue was fueled by a full quarter’s worth of income contribution from Park Hotel Clarke Quay and income from the newly acquired Osaka Namba Washington Hotel Plaza in Osaka, Japan.

Net property income grew at an even faster pace of 32.6% to S$21.5 million. As a result, the trust’s distributable income managed to increase to S$13.7 million, some 25.2% higher compared to a year ago.

Unfortunately, investors in the trust couldn’t enjoy much of that growth. Due to an increase in the number of outstanding units – the trust had done a private placement on April 2014 – and costs incurred for the partial unwinding of cross-currency swaps for its Australian portfolio, the trust ended the quarter with a 3.9% year-on-year decline in distribution per stapled security to 1.24 Singapore cents. But, it should also be noted that if costs for unwinding of the cross-currency swaps were excluded, the trust would have logged a DPS of 1.40 cents for the first quarter instead, representing an 8.5% year-on-year increase.

During the quarter, investors might be happy to note that both the trust’s Australia and China hotels showed growth. In Australia, the average occupancy rate increased from 72.3% a year ago to 78.5% while revenue per available room (RevPAR) jumped by 9.3% year-on-year to A$129. For China, occupancy rates were 83.7%, some 2.9 percentage points stronger than a year ago; RevPAR meanwhile increased by 6.9% to RMB354. RevPAR is a widely-used performance metric in the hospitality sector and generally speaking, the higher, the better.

On the balance sheet front, the trust had a gearing ratio of 38.2% as of 30 June 2014. That’s a slight step backward from three months ago when the gearing ratio was at 35.6%. Comparatively, other listed hospitality trusts like CDL Hospitality Trusts (SGX: J85) and Far East Hospitality Trust (SGX: Q5T) have lower gearing ratios of 29.5% and 30.9% respectively. So, investors might want to keep an eye on Ascendas Hospitality Trust’s balance sheet going forward.

Net asset value per security for the quarter came in at S$0.74, a decline from S$0.77 as of 31 March 2014.

Looking ahead, the trust commented:

“The hospitality outlook in Australia is showing positive signs of growth with improving business confidence, increase in visitor arrivals and limited new supply in Sydney and Melbourne. Occupancy rates in the Beijing hotels are expected to benefit from large-scale annual events like the Beijing International Radio & TV Fair in August and the global software development conference in September. The Managers will maintain their focus on driving the occupancy and improving the room rates of the Australia and China hotels.”

Ascendas Hospitality Trust’s units closed at S$0.74 on Wednesday, with its distribution yield at 7.1%.

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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 Sudhan P doesn’t own shares in any companies mentioned.