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Ascendas Hospitality Trust’s Latest Earnings: What Investors Should Know

Ascendas Hospitality Trust (SGX: Q1P) released its fiscal fourth-quarter earnings on Friday. The reporting period was from 1 January 2015 to 31 March 2015.

Ascendas Hospitality Trust is structured as a stapled security – in this instance, one stapled security comprises of a unit of a real estate investment trust (REIT) and a unit of a business trust. You can read about the differences between the two types of trusts here.

Currently, the stapled trust has 12 hotel properties in its portfolio. These hotels are located in Singapore, Australia, China and Japan; at the local front, Ascendas Hospitality Trust has a stake in Park Hotel Clarke Quay.

You can catch Ascendas Hospitality Trust’s fiscal second-quarter earnings here.

Financial Highlights

Here’s a rundown on the trust’s latest financial figures:

  1. Gross revenue was $54.5 million in the fourth quarter, up by roughly 1.6% compared to the fourth quarter a year ago. For the financial year 2014/2015 (FY 2014/15), gross revenue was up 6% to $227.1 million.
  2. For the reporting quarter, net property income (NPI) inched up by 2.6% to S$22.6 million compared to the same quarter a year ago. For the full year, NPI was up 11.8% to $93.3 million.
  3. Distribution per stapled security (DPS) for the reporting quarter will be 1.25 cents — a 3.3% bump up from the figure of 1.21 cents seen in the same quarter last year. For FY2014/15, the trust’s annual DPS declined by 8.3% to 5.06 cents from 5.52 cents a year ago.
  4. The value of Ascendas Hospitality Trust’s portfolio of properties stood at around $1.373 billion as of 31 March 2015, up 5.9% from a year ago.
  5. Ascendas Hospitality Trust ended FY 2014/15 with an adjusted net asset value (NAV) per unit of $0.74. This represents a 3.9% decline from the NAV of S$0.77 per unit seen at the end of FY 2013/14.

Foolish investors might want to keep an eye on a trust’s debt profile. The debt profile may provide clues on how a trust is funded, and its sensitivity to the interest rate environment. These information are summarized for Ascendas Hospitality Trust below:

  As at 31 March 2015
Gearing 37.2%
Weighted average debt to maturity 2.5 years
Weighted average interest rate 3.2%
Total borrowings $543.7 million
Percentage of borrowings with fixed rate 88.9%

Source: Ascendas Hospitality Trust’s earnings presentation 

Ascendas Hospitality Trust’s gearing is on the higher end at 37.2%. This gearing level consists of a 28.2% gearing for the REIT component and a 42.3% gearing level for the business trust component. Foolish investors should be aware that there is a proposal from the Monetary Authority of Singapore to cap future gearing for REITs to a single-tier limit of 45%.

Ascendas Hospitality Trust has also issued the first $75 million of its $1 billion Multicurrency Stapled Medium Term Note program in April 2015. The next refinancing date for the trust will occur only in June 2016 when a loan of $23 million would come due.

Operational highlights

While the overall gross revenue for Ascendas Hospitality Trust remained relatively unchanged in the fiscal fourth-quarter, it was a different picture for its underlying properties.

In terms of gross revenue, the trust’s Australian properties experienced a 4.2% fall year on year in the fourth-quarter. Revenue per available room (RevPAR) was up 5.1% year on year in Australian dollar terms, but this was offset by a weakening Australian dollar.

Ascendas Hospitality Trust’s property portfolio in Japan had an outstanding fiscal fourth-quarter with a 51.8% spike in gross revenue to S$6.4 million. Contributions from the trust’s newly acquired Osaka Namba Washington Hotel Plaza (the hotel was bought in the first-quarter of FY 2014/15) was responsible for this jump.

Speaking on the reporting quarter, the Chief Executive Officer of the trust’s manager, Tay Juay Hiang, had the following comments in the earnings release:

“We are heartened that A-HTRUST’s portfolio was able to deliver an encouraging performance for FY2014/15, despite the headwinds encountered. The managed hotels in Australia, China and Japan recorded overall improvement in RevPAR, and the acquisition of Osaka Namba also contributed positively to the performance of the portfolio.

However, distribution to stapled securityholders was affected by the weakening of AUD and JPY against the SGD. As we continue to face volatility in the currency markets, the completion of the unwinding of the AUDSGD cross currency swaps in October 2014 will put A-HTRUST in a better position to face such uncertainties.

We will continue to build on the encouraging performance of the portfolio and remain committed to deliver sustainable growth through improvement of assets and seeking value accretive acquisitions to optimise the overall quality of the portfolio.”

Foolish summary

Ascendas Hospitality Trust last traded at $0.71 on Friday. This translates to a historical price-to-book ratio of 0.96 and a trailing twelve months distribution yield of 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 Chin Hui Leong doesn’t own shares in any companies mentioned.