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A Quick Investing Guide to Ascott Residence Trust

Ascott Residence Trust (SGX: A68U), as its name suggests, is a real estate investment trust that focuses on hospitality assets.

For investors looking at the REIT, it’s worthwhile knowing its geographical exposure, its lease structure, and its latest results. So, here they are.

Geographical exposure

The diagram below shows Ascott Residence Trust’s asset-breakdown by country:


Source: Ascott Residence Trust 2017 first quarter earnings presentation

As the diagram shows, Ascott Residence Trust’s assets are in 14 countries. This makes the REIT geographically diversified. In addition, these assets are found in both developed and developing economies, which adds another layer of diversification.

Lease structure

Here’s a diagram that gives some details on the lease structure of Ascott Residence Trust:


Source: Ascott Residence Trust 2017 first quarter earnings presentation

We can see that 42% of the REIT’s gross profit in the first quarter of 2017 came from master leases and management contracts that come with minimum guaranteed income. The presence of a guaranteed level of income provides a stable source of revenue for the REIT.

We can also see that Ascott Residence Trust’s leases have a weighted average expiry of 3.3 years. This is not a long time frame, so investors may want to pay attention to the REIT’s lease-negotiation process.

Latest results

The diagram below shows some important items from Ascott Residence Trust’s income statement for the first quarters of 2017 and 2016:


Source: Ascott Residence Trust 2017 first quarter earnings presentation

The first quarter of 2017 was mixed for the REIT. Despite a 5% increase in revenue during the quarter, Ascott Residence Trust’s distribution per unit (DPU) actually declined by 14%.

The lower DPU was mainly due to the absence of currency exchange gains and dilution due to a placement exercise. Meanwhile, the growth in revenue came mainly from the acquisition of the Sheraton Tribeca New York Hotel in 2016 (the acquisition was partly funded by the aforementioned placement exercise).

If the effects of the private placement and the currency exchange gains in the first quarter of 2016 were adjusted for, Ascott Residence Trust’s DPU in the first quarter of 2017 would have displayed growth of 4%.

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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 Lawrence Nga doesn’t own shares in any companies mentioned.