Three Things To Like About Ascott Residence Trust

With 86 properties in 36 cities spread across 13 countries in Asia Pacific and Europe, that has got to be the first thing to like about Ascott Residence Trust (SGX: A68U).

The Real Estate Investment Trust provides investors with an abundance of geographic diversification. Around a-seventh of the REITs’ revenues comes separately from China, Japan and the UK. A further one-tenth comes separately from France, Singapore, the Philippines and Vietnam. The remainder is generated from the company’s properties in Australia, Germany, Belgium, Spain, Indonesia and Malaysia.

Ascott Residence Trust has also been good at delivering a decent return to shareholders. That is the second thing to like about the REIT. Whilst the growth in the company’s shares has been close to non-existent, the total return, which includes dividends, tells a different story.

Since 2006, Ascott Residence Trust delivered a total annual total return of 8.5%. In other words, an investment of S$10,000 nine years ago would have more than doubled to almost $21,000 today.

The third thing to like about Ascott Residence Trust is the steady rise in its market value over time. Nine years ago, the company was worth around S$560m – today it is worth over S$2b. It could be a sign of a business that has a plan for growth.

However, with a gearing ratio that is flirting with the maximum borrowings permitted for a REIT, Ascott Residence Trust may need to look at other ways to boost its market capitalisation in future.

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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 Director David Kuo doesn’t own shares in any companies mentioned.