Ascendas Hospitality Trust (SGX:Q1P) is a stapled trust that owns a portfolio of nine hospitality-related real estate in Singapore, Japan and Australia. Recently, the trust released its full year and fourth quarter results for the financial year 2017/18 (FY17/18), which ended on 31 March 2018. Here are some highlights from its earnings update.
1. Revenue for the fourth quarter of FY17/18 declined 4.6% to S$54.7 million from S$57.4 million. Net property income dropped even more by 8.0% to S$23.7 million from S$25.8 million.
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2. However, distributable income for the quarter rose 30.7% to S$21.1 million from S$16.2 million. Distribution per stapled security, consequently, increased 25.5% to 1.72 Singapore cents from 1.37 Singapore cents.
3. The decline in revenue was due to loss of revenue from the China portfolio, which the trust divested in January this year. The increase in distributable income was, likewise, due to proceeds from the divestment.
4. Here is a closer look on the portfolio performance by geography for the fourth quarter of FY17/18.
Source: Ascendas Hospitality Trust earnings presentation
5. For the full year, gross revenue inched up 0.1% year-on-year to S$224.7 million from S$224.4 million. Meanwhile, net property income declined 3.5%. Adjusted distributable income rose 3.7% to S$66.2 million from S$62.9 million. DPS for the year, consequently, increased 3.2% to 5.86 Singapore cents from 5.68 Singapore cents in FY16/17.
6. The lower net property income for the year was due to poorer performance from the trust’s Australian portfolio, while the DPS growth was largely because of fee received from its divestment mentioned earlier.
7. As of 31 March 2018, the trust’s portfolio was valued at S$1.63 billion, up 0.6% from a year ago. This translates to valuation gain of S$10.5 million. Net asset value per stapled security also rose four Singapore cents or 4.65% to S$0.92 from S$0.86 on 31 December 2017.
8. As of 31 March 2018, the trust had S$535.2 million in borrowings and total assets valued at S$1.74 billion. This gives a gearing ratio of 30.8%, an improvement from the gearing ratio of 33.2% on 31 December 2017. The better showing was largely due to the use of divestment proceeds to pay off some of its loans. The trust had a weighted average interest rate of 2.6% and weighted average debt to maturity of 2.7 years.
9. On the outlook for the year ahead, the trust’s management said that international arrivals in Singapore is forecast to grow by 1% to 4% in 2018. As supply tapers from 2018, the competition in the local hotel market is expected to ease. At the same time, the Australia market remains challenging as competition in Melbourne intensifies.
10. At the time of writing, units of Ascendas Hospitality Trust exchanged hands at S$0.815. This translates to a price-to-book ratio of 0.9 and a 12-month trailing distribution yield of 7.2%.
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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 Jeremy Chia doesn’t own shares in any companies mentioned.