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Key Highlights from Ascott Residence Trust’s Latest Earnings

This morning, Ascott Residence Trust (SGX: A68U) released its second-quarter earnings for 2017. The reporting period was for 1 April 2017 to 30 June 2017.

The real estate investment trust (REIT) has an international portfolio of mainly serviced residences. This comprises 73 properties with 11,417 units in 38 cities across 14 countries in the Americas, Asia Pacific and Europe. Its sponsor is property giant, CapitaLand Limited (SGX: C31).

You can check out the results from the REIT’s first quarter here.

Financial highlights

Source: Ascott Residence Trust’s Earnings Presentation

For the quarter, revenue went up S$4.2 million, or 4% year-on-year, to S$123.6 million mainly due to the “additional revenue of S$3.0 million from Sheraton Tribeca New York Hotel and S$0.9 million from Citadines City Centre Frankfurt and Citadines Michel Hamburg”. This improvement was partly offset by “a decrease in revenue of S$1.4 million from the divestment of 18 rental housing properties in Tokyo”.

On a like-for-like basis, revenue went up by less, just S$1.7 million, mainly from the properties in Vietnam and Philippines, partially offset by the decrease in revenue from Singapore and United Kingdom (due to unfavourable foreign exchange rates).

Revenue per available unit (RevPau), a metric used by the hospitality sector to measure the average amount of revenue a serviced residence makes per room, went up from S$142 in the second quarter of 2016 to S$146 in the latest quarter, a rise of 3%.

Unitholders’ distribution increased 34% year-on-year to S$46.9 million, largely due to one-off realised exchange gains. However, distribution per unit (DPU) went in the opposite direction to 1.84 cents, mainly on the back of one-off items, the effects of the rights issue and equity placement.

Capital and Risk Management

Source: Ascott Residence Trust’s Earnings Presentation

As at 30 June 2017, the gearing was 32.4%, which is below the 45% regulatory limit. The leverage ratio was a vast improvement from the figure of 41.1% seen at the end of March 2017. 85% of the REIT’s borrowings are on fixed interest rates to hedge against rising interest rates.

It ended the quarter with a net asset value per unit of S$1.23, a decline from S$1.29 as at March 2017.


The REIT said:

“Going forward, Ascott REIT will continue to focus on creating stable income and returns to Unitholders through its diversified portfolio and extended-stay business model, together with the master leases and management contracts with minimum guaranteed income.”

Ascott REIT is currently priced at S$1.18. This gives a historical price-to-book ratio of 0.96 and a trailing distribution yield of 6.6%.

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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.