Ascott's Q3 DPU drops 11% on one-off items, rights issue
Revenue up 9% to S$93.7m on the back of additional income from new properties
Singapore
ASCOTT Reit on Thursday reported a distribution per unit (DPU) of 2.11 Singapore cents for the third quarter ended Sept 30, 2014 - an 11 per cent drop from the 2.37 Singapore cents paid a year ago, which included one-off items of about S$1.5 million.
If the one-off items (which had to do with fair value gains from the unwinding of interest rates swaps) and Ascott Reit's rights issue in Dec 2013 were excluded, the DPU would have been 15 per cent higher, it said.
Revenue rose 9 per cent to S$93.7 million due to the additional income of S$8.5 million from new properties acquired in 2014, and stronger contribution from existing properties.
The increase was partially offset by the decrease in revenue of S$1.2 million as Somerset Grand Fortune Garden in Beijing ceased operations due to the ongoing strata sale of its apartment units.
Japan was the serviced apartment Reit's strongest performing market in Q3. Revenue for Japan surged 26 per cent, mainly due to the acquisition of Infini Garden in March this year and stronger demand for its serviced residences from corporate and leisure travellers.
Chief executive officer Ronald Tay attributed this to the depreciating yen which has attracted tourists back to the country, as well as the government's quantitative easing programme, which has released a lot of liquidity into the market.
"Then, there is the feel-good factor leading into the 2020 Olympics, which will be held in Tokyo. These help to underpin demand for the hospitality industry in Japan," he said.
In Singapore, the revenue of properties under management contracts dropped 3 per cent, or S$200,000, in Q3, while revenue per average unit fell 2 per cent from S$230 in Q3 2013 to S$225 in Q3 2014.
Mr Tay said that the decrease was mainly due to lower corporate accommodation budgets, but added that the impact was not severe.
"Occupancies for our properties remain quite healthy in the high 80s (per cent). If they drop to 60-70 per cent, then it'll be a big cause for concern, but we have been able to fill up our inventory, it's just that rates have softened compared to Q3 last year."
The Reit has had to lower rates, but takes comfort in the fact that leases continue to be renewed.
"On a full-year basis, we expect Singapore's performance to be in line with 2013. Perhaps if we can maintain a continuously new level of occupancy of close to 90 per cent for a few months, we will be in a good position to start to push up room rates a bit thereafter," he said.
The Reit, which made its maiden issuance of S$150 million perpetual securities in Oct 2014, also continues to actively seek accretive acquisitions in key cities of Asia Pacific and Europe.
Its counter ended trading at S$1.24 on Thursday, up one cent.
