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Ascott Residence Trust reports 2HFY2021 DPS of 2.27 cents, up 14% on one-off divestment gain

·3-min read

DPS for the FY2021 grew 43% y-o-y to 4.32 cents.

The manager of Ascott Residence Trust (ART) has reported a distribution per stapled security (DPS) of 2.27 cents for the 2HFY2021, up 14% y-o-y. This brings DPS for the FY2021 to 4.32 cents, up 43% y-o-y.

Excluding the divestment gains distributed in both FY2021 and FY2020, ART’s DPS was up 85% y-o-y.

Distribution income for the 2HFY2021 rose 19% y-o-y to $73.5 million, which includes a one-off divestment gain of $25.0 million to share divestment gains with the REIT’s stapled securityholders. The move was also made to replace income loss from divestment assets and mitigate the impact of Covid-19, says ART in a Jan 28 statement.

2HFY2021 gross revenue rose 30% y-o-y to $209.4 million due to the higher revenue of $45.4 million from the existing portfolio, as well as additional contribution of $11.7 million from the acquisition of six student accommodation properties in the US and three rental housing properties in Japan.

The higher amount was offset by a decrease in revenue of $9.1 million from the divestments of several properties including Ascott Guangzhou and Citadines Didot Montparnasse.

In the 2HFY2021, ART achieved a revenue per average unit (revPAU) of $79, up 61% y-o-y higher occupancy and average daily rate. In the 4QFY2021, ART’s revPAU surged 24% q-o-q to $87, its highest q-o-q increase so far, on the back of the faster pace of reopening.

During the period, ART’s long-stay properties continued to provide income stability, while the easing of travel restrictions and increased global economic activities led to a hike in demand from both corporate and leisure guests. ART’s key markets – the US, UK and Australia – saw the strongest growth.

2HFY2021 gross profit rose 49% y-o-y to $91.2 million from properties on master leases, properties on management contracts with minimum guaranteed income and properties on management contracts.

As at end-December, cash and cash equivalents stood at $346.3 million.

Bob Tan, chairman of the managers says, “Through our active portfolio management, we have enhanced ART’s income stability by building its longer-stay assets and further diversifying its portfolio. In the past year, ART invested $780 million in 11 yield-accretive rental housing and student accommodation assets at an average EBITDA yield of about 5%.”

“We have successfully replaced the distribution income from our divested assets at higher yields. In FY 2020 and 2021, ART divested six assets at an average exit yield of around 2% and received about S$580 million in proceeds. Our longer-stay assets currently make up about 16% of our total portfolio value,” he adds. “We will raise the asset allocation target in these longer-stay assets from 15-20% in the medium term to 25-30%, further strengthening the resilience of ART’s portfolio.”

Beh Siew Kim, CEO of the managers says the REIT will “continue to seek more yield-accretive investments while remaining committed to sustainability and taking a disciplined approach in managing our capital and costs.”

“Economic growth is expected to be modest in the near term, given the mobility restrictions in light of the Omicron variant and tightening of monetary policies to curb inflationary pressures. ART’s presence in large domestic markets will allow us to continue capturing the strong local demand in the interim,” she adds, citing that travel is covering in many markets amid the rising vaccination rates.

“The coordinated lifting of travel restrictions and governments’ commitment to the reopening of international borders, could further help to restore confidence in travel and accelerate recovery in 2022. With ART’s geographically diversified portfolio, we are well-positioned to capture demand as international travel gradually returns,” she continues.

Units in ART closed flat at $1.03 on Jan 27.

Photo: ART

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