Ascott Reit DPU rises 7% to 1.45 Singapore cents for Q1

ASCOTT Residence Trust (Ascott Reit) on Tuesday reported a 7 per cent rise in its distribution per unit (DPU) to 1.45 Singapore cents for the first quarter ended March 31, 2019, from 1.35 Singapore cents a year ago.

Adjusted for one-off items, the Singapore-listed hospitality trust's DPU would have been 1.33 Singapore cents, up 4 per cent from the previous pay-out of 1.28 Singapore cents.

As at 3.31pm on Tuesday, units in Ascott Reit were trading flat at S$1.21.

Net income before changes in fair value rose 4 per cent to S$34.8 million, up from S$33.3 million last year.

Distribution to unitholders for Q1 also grew 8 per cent to S$31.5 million, due to better operating performance, lower financing costs and higher one-off realised exchange gain, said Ascott Reit's manager.

It added that the realised exchange gain of S$2.6 million for Q1 arose from the repayment of foreign currency bank loans, with a 15 per cent deposit received for the divestment of Ascott Raffles Place Singapore, announced in January this year. The divestment is expected to be completed in May 2019.

Said Bob Tan, chairman of the manager: "Ascott Reit continued to deliver stable returns in the first quarter this year due to strong operating performance, with higher contributions particularly from Singapore and the United Kingdom. Our debt headroom of close to S$900 million will give us the financial flexibility to pursue accretive acquisitions from our sponsor The Ascott Limited and third parties."

"As part of our disciplined capital recycling approach, we recently announced our acquisition of Citadines Connect Sydney Airport, a prime freehold business hotel, for A$60.6 million with an expected yield of over 6 per cent. This was right after our divestment of Ascott Raffles Place Singapore for S$353.3 million at an exit yield of about 2 per cent."

For the quarter, revenue was up 3 per cent to S$115.9 million, mainly attributable to stronger performance from the Reit's properties in Singapore, the UK and the Philippines, the manager said.

Meanwhile, gross profit climbed 12 per cent to S$54.6 million, and revenue per available unit (RevPAU) for Q1 came in at S$133 per day, representing a 3 per cent increase from the year-ago period.

The trust adopted the new FRS 116 standard for lease accounting in the latest quarter, which affects the treatment of leases. When the impact of FRS 116 is removed, gross profit would have inched up 2 per cent to S$49.5 million for the three months ended March 31.

Looking ahead, the manager noted that while international travel continues to be sustained by the rising middle-class and better air connectivity, a slowdown in the global economy, geopolitical and trade tensions remain potential headwinds.

"The operating environment remains uncertain, given the competition from new supply and rising costs. However, with a portfolio that comprised 43 per cent of stable income from master leases and management contracts with minimum guaranteed income as at March 31, Ascott Reit's geographically diversified presence and resilient income streams minimise the impact of such risks, and enable the Reit to deliver stable returns to unitholders," the manager said.

Beh Siew Kim, chief executive officer of the manager also noted that the Reit is committed to driving the operating performance of its properties through active asset enhancement initiatives, and expects higher average daily rates for Somerset Grand Citra Jakarta and Element New York Times Square West when their refurbishments are completed in mid-2019.