Ascott Residence Trust posts 1% rise in Q1 DPU; OCBC keeps 'buy' call

ASCOTT Residence Trust (ART) reported a one per cent rise in distribution per unit (DPU) from a year ago to 1.76 cents for the first quarter ended March 31, 2015.

Revenue rose 12 per cent to S$90 million while gross profit grew 10 per cent to S$43.1 million, mainly due to the additional income from new properties acquired last year. Revenue per available unit (RevPAU) was lower by 8 per cent, mainly due to weaker performance from Singapore and Vietnam properties and lower average daily rate from the China properties acquired in 2014.

At 9.52am on Friday, ART unit price was unchanged at S$1.27.

Following ART's release of Q1 results, OCBC Investment Research analyst Andy Wong said he is maintaining a "buy" call on ART, but may revise the fair value estimate of S$1.49 downwards as the Q1 results missed OCBC's expectations. ART's Q1 DPU made up just 20.8 per cent of OCBC's FY15 estimate, he pointed out.

Lim Jit Poh, chairman of Ascott Residence Trust Management Limited (ARTML), said on Thursday that the target is to grow ART from S$4.1 billion to S$6 billion by 2017.

"We will actively seek accretive acquisitions in key cities of Asia Pacific and Europe, review opportunities to unlock value in our portfolio to recycle capital and enhance the operational performance of our properties," he said.

Ronald Tay, chief executive of ARTML, noted that Japan was the strongest performing market in the first quarter and second largest market after China, making up over 15 per cent of ART's total asset value.

"As part of our strategy to optimise returns to unitholders, we will divest some of our properties with limited growth potential," he added. "We will also continue to refurbish our properties to enhance guest experience and maximise returns to unitholders."