CFA Society Singapore
SINGAPORE (Apr 18): The manager of Ascott Residence Trust (Ascott REIT) reported a 16% rise in 1Q18 unitholders’ distribution to $29.2 million from 1Q17.
However, 1Q18 DPU fell 11% to 1.35 cents from 1.51 cents in 1Q17 due to the effects of the April 2017 rights issue offset by one-off forex and divestment gains from the China properties.
Ascott Residence Trust Management (ARTML) said the rise in unitholders’ distribution was due to contributions from acquisitions in 2017 and a realised exchange gain of $1.6 million arising from the proceeds received from the divestment of two serviced residences in Shanghai and Xi’an of China, as well as the repayment of foreign currency bank loans with the divestment proceeds.
For 1Q 2018, Ascott REIT’s gross profit went up by 3% to S$48.7 million, while its revenue grew 1% to $112.8 million.
Bob Tan, ARTML Chairman, says, “Ascott REIT continues to deliver stable returns to Unitholders in 1Q 2018 through its quality assets across Asia Pacific, Europe and the US. Ascott Reit’s four acquisitions in Singapore, Frankfurt, Hamburg and New York last year continue to contribute to higher gross profit."
Ascott REIT's overall RevPAU rose 1% to $129/day in 1Q18 from $128/day in 1Q17.
Belgium was the best performer with a 20% increase in RevPAU due to stronger demand, while the RevPAU for China grew 16% with the divestments of the two properties in Shanghai and Xi’an. RevPAU for the United Kingdom rose 7% due to greater leisure demand and higher revenue from the refurbished apartments at Citadines Barbican London. Stronger corporate demand also contributed to a 4% increase in RevPAU for Indonesia.
Beh Siew Kim, ARTML’s CEO, said about 86% of the REIT's total borrowings on fixed interest rates to hedge against potential rising interest rates. The manager has also started discussions with banks to refinance the debts due in 2018, ahead of their maturity dates, and will continue to monitor and manage its interest rate and exchange rate exposure.
In a flash report after the announcement, UOB KayHian analyst Vikrant Pandey says Ascott REIT's results came in below the house and consensus expectations with 1Q18 DPU representing 18.6% of the full year forecast. UOB has a "hold" with a target price of $1.23.
Units in Ascott REIT closed at 1.14 cents on Wednesday.