Ascendas Hospitality Trust Q3 DPS up despite fall in revenue

Singapore

SCENDAS Hospitality Trust on Thursday reported a distribution per stapled security (DPS) of 1.45 Singapore cents for the third quarter ended Dec 31, 2015 (Q3 FY2016). This was up from 1.3 cents in the corresponding period a year earlier.

Gross revenue slid 9.5 per cent year-on-year to S$54.9 million, while net property income dropped 9.3 per cent to S$23.4 million.

This was mainly due to the loss of income from Pullman Cairns International which was divested in June 2015, and lower contribution from Pullman and Mercure Brisbane King George Square due to the lack of large-scale events, such as the G20 summit held in the corresponding quarter last year.

The continual weakening of the Australian dollar against the Singapore dollar also played a part in lowering gross revenue and net property income for the quarter.

Income available for distribution rose 17.6 per cent to S$17 million. This was largely attributed to absence of costs related to the unwinding of a cross currency swap this quarter, as well as the inclusion of a portion of proceeds from the divestment of the Cairns Hotel.

While income derived from Park Hotel Clarke Quay in Singapore declined, the China portfolio showed an improved performance. The Oakwood Apartments Ariake Tokyo, meanwhile, posted a 24.7 per cent year-on-year improvement in revenue per available room.

Ascendas Hospitality pointed to Japan as a potential bright spot ahead, given the growing trend of foreign visitors to Japan.

The CEO of the trust's managers, Tan Juay Hiang, said: "Given the positive sector outlook in Japan in general, we believe that our hotels in Tokyo and Osaka respectively will perform better. In addition, the JPY1.1 billion (S$13.3 million) renovation work on the hotel in Osaka, renamed as Hotel Sunroute Osaka Namba, has commenced and is expected to be completed by end of March 2016. We believe that following the renovation, the hotel's contribution to the portfolio will be enhanced."

But a more pessimistic picture was painted for Beijing, given China's slowing economy and Beijing's pollution issue. "These factors coupled with an oversupply of hotel rooms may continue to hamper the hotel market sector," said Ascendas Hospitality.

News broke last week that property investment firm Starwood Capital Group and Chinese billionaire Guo Guangchang's Fosun International are weighing bids for Ascendas Hospitality, according to people with knowledge of the matter. Sources had added the two groups are studying the Singapore-based hotel owner, and could submit offers as early as the end of January.

The trust ended one cent or 1.32 per cent higher at S$0.765 on the stock market.