Ascott Reit's Q2 DPU stays flat at 1.84 cents

An apartment at Citadines City Centre Frankfurt, one of the assets with master leases providing income stability to Ascott Reit.
An apartment at Citadines City Centre Frankfurt, one of the assets with master leases providing income stability to Ascott Reit.PHOTO: ASCOTT REIT

Higher revenue and gross profit result from acquisitions of assets

Ascott Residence Trust's distribution per unit (DPU) stayed flat at 1.84 cents for the second quarter ended June 30, the residential real estate investment trust (Reit) announced yesterday.

Unit holders' distribution fell 15 per cent to $39.8 million. Second-quarter gross revenue rose 6 per cent to $130.5 million, while gross profit rose 7 per cent to $63.1 million.

Ascott Reit said second-quarter DPU would have increased by 13 per cent if a one-off item for the same period last year was excluded. This was a realised exchange gain of $11.9 million from the repayment of foreign currency bank loans with the proceeds from a rights issue and completion of divestments of 18 rental housing properties in Tokyo.

The Reit's higher revenue and gross profit resulted from its acquisitions of assets including Ascott Orchard Singapore, Citadines City Centre Frankfurt and Citadines Michel Hamburg with master leases providing income stability, as well as DoubleTree by Hilton Hotel New York - Times Square South, which continues to see strong demand, it said.

For the first half of the year ended June 30, DPU fell 5 per cent to 3.19 cents. Revenue increased by 4 per cent to $243.3 million, and gross profit rose by 5 per cent to $111.8 million. Unit holders' distribution fell 4 per cent to $68.9 million on the back of contributions from a realised exchange gain of $1.6 million arising from divestment proceeds and repayment of foreign currency bank loans with the proceeds.

"Ascott Reit's asset size has grown sixfold and shareholder returns have increased over 200 per cent since its listing in 2006," said chairman Bob Tan.

  • AT A GLANCE

  • DISTRIBUTION PER UNIT: 1.84 cents (unchanged)

    GROSS REVENUE: $130.5 million (+6%)

Ascott will continue to seek accretive acquisitions to sustain growth and maintain a balanced portfolio for stable income through master leases and management contracts.

Mr Tan added: "We will also actively manage our portfolio by identifying opportunities to divest assets and redeploy the capital to higher-yielding properties."

Although the global economy is forecast by the International Monetary Fund to grow 3.9 per cent this year, tightening financial conditions and trade tensions are threatening global growth, Ascott said.

Chief executive Beh Siew Kim said Ascott will continue to monitor and manage interest rates and foreign currency exposure through appropriate capital financing and hedging. About 84 per cent of its total borrowings are on fixed interest rates to hedge against potential interest rate hikes.

"We have also ensured our debt maturity is well spread over the long term with the bulk of debt maturing in 2020 and beyond."

A version of this article appeared in the print edition of The Straits Times on July 25, 2018, with the headline 'Ascott Reit's Q2 DPU stays flat at 1.84 cents'. Print Edition | Subscribe