Ascendas Hospitality Trust posts stable DPS for quarter

Weak corporate demand and oversupply of rooms in Singapore resulted in lower contributions to Ascendas Hospitality Trust from Park Hotel Clarke Quay (above) in the second quarter.
Weak corporate demand and oversupply of rooms in Singapore resulted in lower contributions to Ascendas Hospitality Trust from Park Hotel Clarke Quay (above) in the second quarter.ST FILE PHOTO

Hotel owner Ascendas Hospitality Trust delivered a stable distribution per stapled security (DPS) in the second quarter, thanks to higher income and revenue.

DPS for the three months to Sept 30 was 1.38 cents, unchanged from the same period a year ago, as income available for distribution remained flat at $15.5 million.

Net property income rose 7.7 per cent to $24.3 million, from $22.6 million in the previous year, while gross revenue climbed 2.5 per cent to $55.6 million.

The higher earnings and turnover was mainly due to increased contributions from its hotels in Japan, as well as the appreciation of the Japanese yen, which lifted income in Singdollar terms, the trust managers said yesterday.

"We believe that the diversified nature of the portfolio will continue to benefit the stapled security holders," said Mr Tan Juay Hiang, chief executive of the managers.

Ascendas Hospitality Trust is a stapled group comprising Ascendas Hospitality Real Estate Investment Trust and Ascendas Hospitality Business Trust.

  • AT A GLANCE

    GROSS REVENUE

    $55.6 million (+2.5%)

    NET PROPERTY INCOME

    $24.3 million (+7.7%)

    DISTRIBUTION PER STAPLED SECURITY: 1.38 cents (unchanged)

The improvement of the Japanese portfolio was largely driven by Hotel Sunroute Osaka Namba, which benefited from the enhanced rent structure in the new master lease agreement with Sunroute.

In Australia, the Novotel Sydney Central, Pullman, and Mercure Melbourne Albert Park hotels turned in better performances, owing to new aircrew contracts.

The trust managers noted that the opening of three new hotels in Brisbane in the first half of the year and the "prolonged downturn in the resource sector" continued to weigh on the performances of Pullman and Mercure King George Square in the quarter.

Weak corporate demand and oversupply of rooms in Singapore also resulted in lower contributions from Park Hotel Clarke Quay.

"For Singapore, however, the defensive nature of the rent structure for Park Hotel Clarke Quay, where a high proportion of rent is fixed, will provide downside protection... during softer market conditions," Mr Tan added.

Earnings per stapled security for the second quarter was 0.84 cent, up from 0.48 cent a year ago. Net asset value per stapled security was 88 cents as at Sept 30, higher than the 86 cents at the end of March.

Net property income rose 6.6 per cent to $46.9 million in the first half on revenue of $107.9 million.

DPS for the period was 2.67 cents, up from 2.66 cents a year ago.

The trust managers expect the hotel sector in Singapore to remain challenging in the near term, but are fairly upbeat about Australia and Japan, citing growth in inbound arrivals. However, they note that continual strengthening of the Japanese yen may affect visitor arrivals to the country.

The trust's units closed half a cent lower at 73.5 cents yesterday, before its earnings were announced.

A version of this article appeared in the print edition of The Straits Times on November 10, 2016, with the headline 'Ascendas Hospitality Trust posts stable DPS for quarter'. Print Edition | Subscribe