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Second-half Distributions Rise At Ascott Residence Trust

Ascott Residence Trust (SGX: A68U) reported an increase in distribution per unit (DPU), thanks to improved overall performance of the portfolio.

The latest report was for full-year earnings for the year ending 31 December 2018.

Ascott REIT is an established property owner with assets in serviced residences, rental housing, and hospitality. The REIT’s portfolio consists of 73 properties with 11,430 units spread across 37 cities in 14 countries. Ascott’s assets are valued at S$5.3 billion.

  1. Gross revenue for the quarter increased 4% year-on-year to S$514.3 million. Gross profit rose 5% to S$239.4 million.
  2. The uptick in revenue and gross profit resulted in an increasing distributable income which came in at S$154.8 million, which was 2% higher than last year. This resulted in a 1% rise in distribution per unit (DPU) which came in at 7.16 cents. The increase in revenue and DPU is attributed to higher contributions from the enlarged portfolio due to acquisitions and better performance of existing properties.
  3. As of 31 December 2018, the Trust’s gearing stood at 36.7%. The weighted average annualised interest rate stood at 2.3%. The REIT didn’t mention specifics about its debt duration but mentioned that 96% of its debt is maturing in 2020 and beyond. Around 80% of the REIT’s debt are fixed-rate loans and 49% of its income is hedged against forex risks. Interest cover stood at 4.8 times, which is a slight improvement year-on-year.
  4. Ascott reported a resilient performance with 59% of revenue coming from growth markets and 41% from stable markets. The revenue per available room for Q4 2018 came in at S$163, which is an increase of 5% year on year.
  5. Ascott’s net asset value (NAV) declined by 2.4% compared to 31 December 2017, coming in at S$1.22.

The Road Ahead

Beh Siew Kim, ARTML’s Chief Executive Officer, said:

“Enhancing Unitholders’ returns through proactive asset management, including refurbishing our properties and leveraging technology, continues to be our priority. Our refurbished properties have not only created a better experience for guests, average daily rates for these properties have also increased about 10% to 20% due to stronger demand. During the year, we completed the refurbishments for Ascott Makati, Citadines Arnulfpark Munich, Citadines Trocadéro Paris, Somerset Grand Hanoi, and Sheraton Tribeca New York Hotel. We are also carrying out refurbishment works at Somerset Grand Citra Jakarta and Element New York Times Square West, to be completed this year.

“While there are mixed views regarding further interest rate hikes in 2019, any possible increase is not expected to have any significant impact to Ascott Reit’s total returns. We maintain a disciplined and prudent approach towards capital management, with 80% of Ascott Reit’s total borrowings on fixed interest rates and a well-spread debt maturity where less than 5% of debt will mature in 2019. Ascott Reit’s gearing stands at a healthy 36.7%. We will continue to monitor and manage its interest rate and exchange rate exposure.”

Units of Ascott are currently trading at S$1.17, sporting a price-to-book ratio of around 0.95 and a yield of 6.12%.

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The Motley Fool writer, Esjay, contributed toward this article.

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The Motley Fool Singapore has a recommendation for Ascott Residence Trust. Motley Fool Singapore Director David Kuo own shares in Ascott Residence Trust. Esjay owns shares in Ascott Residence Trust.