Ascott Reit's Q2 DPU up 8% at 1.98 cents

SINGAPORE - Ascott Residence Trust (Ascott Reit) on Tuesday (July 30) reported an 8 per cent rise in its distribution per unit (DPU) to 1.98 cents for the second quarter ended June 30, from 1.84 cents a year ago.

Adjusted for one-off items, the Singapore-listed hospitality trust's DPU would have been 1.84 cents, unchanged from the previous pay-out.

Units in Ascott Reit closed flat at $1.30 on Monday, before the release of its financial results.

For the quarter, net income before changes in fair value rose 36 per cent to $50.4 million, up from $37.1 million last year.

Distribution to unitholders for Q2 also grew 8 per cent to $43.1 million, on the back of stronger portfolio performance, lower finance costs and a one-off realised exchange gain, said Ascott Reit's manager.

It added that the realised exchange gain of $3.1 million for Q2 arose from the repayment of foreign currency bank loans with the divestment proceeds from Ascott Raffles Place Singapore.

Said Bob Tan, chairman of the manager: "Ascott Reit's DPU continued to grow steadily in the second quarter... In the first half of this year, we divested Ascott Raffles Place Singapore at 64 per cent above book value, and acquired Citadines Connect Sydney Airport, a prime business hotel. We will continue to focus on delivering stable returns to unitholders and maintain a balance of stable and growth income.

"With our recent proposed combination of Ascott Reit and Ascendas Hospitality Trust (A-HTrust), we expect higher stable income for the combined entity at 46 per cent of gross profit. Ascott Reit's DPU is expected to grow 2.5 per cent on a FY2018 pro forma basis through the combination. With a debt headroom of about $1 billion for the combined entity, we will have the financial capacity to pursue more accretive acquisitions and undertake development or conversion projects to enhance portfolio value."

On July 3, 2019, Ascott Reit announced the proposed combination with A-HTrust. This transaction is subject to unitholders' approval, and is expected to be completed by the end of this year, the manager said.

For the three months ended June 30, revenue was up 2 per cent to $132.5 million, mainly attributable to the acquisition of Citadines Connect Sydney Airport in May this year, and stronger performance from the Reit's properties in the Philippines, the United Kingdom and Japan, the manager said.

Meanwhile, gross profit climbed 7 per cent to $67.6 million, and revenue per available unit (RevPAU) for Q2 came in at $158 per day, representing a 2 per cent increase from the year-ago period.

The trust adopted the FRS 116 standard for lease accounting with effect from Jan 1 this year, which affects the treatment of leases. When the impact of FRS 116 is removed, gross profit would have fallen 1 per cent to $62.5 million for the three months ended June 30.

For the half-year, DPU rose 8 per cent to 3.43 cents, from 3.19 cents a year ago.

Book closure is Aug 7, with distribution payment date slated for Aug 29.

For the six months ended June 30, revenue also gained 2 per cent to $248.4 million, while gross profit added 9 per cent to $122.3 million.

Looking ahead, the manager noted that while the global economy remains delicate as trade tensions continue to weigh on business confidence, in the longer term, Ascott Reit continues to be positive in the hospitality sector, particularly in Asia-Pacific, where the demand for business and leisure travel is underpinned by economic growth and an expanding middle class.