Ascott Residence Trust DPS down 69% to 1.05 S cents for H1

ASCOTT Residence Trust's (ART) distribution per stapled security (DPS) fell by 69 per cent to 1.05 Singapore cents for its half year ended June 30, 2020 from 3.43 Singapore cents a year ago.

Revenue was down 16 per cent to S$208.5 million for the six-month period, from S$248.4 million a year earlier.

This was mainly attributed to the decrease in revenue of S$4.2 million from the divestment of Ascott Raffles Place Singapore and Somerset West Lake Hanoi, as well as lower revenue of S$91.1 million from the existing portfolio, the managers said in a regulatory filing on Tuesday.

The decrease was partially offset by the additional contribution of S$55.4 million from the acquisition of Ascendas Hospitality Trust's (A-HTrust) portfolio in December 2019, and the acquisition of Quest Macquarie Park Sydney and Citadines Connect Sydney Airport in February 2020 and May 2019 respectively.

Gross profit slipped 28 per cent to S$88.6 million, from S$122.3 million a year ago. In H1 2020, 21 of ART's properties were temporarily closed either due to government mandate or weak accommodation demand. However, lower operating costs from cost containment and government support measures helped to offset the decline in gross profit, the managers noted. "While 12 properties have since reopened and seven more are scheduled to reopen in Q3, operators and lessees of ART's properties continue to face operating challenges brought about by the Covid-19 pandemic," the managers said.

Meanwhile, distributable income declined 56 per cent year on year to S$32.6 million, from S$74.6 million. The distribution will be paid out on Aug 28, after books closure on Aug 6.

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In view of the uncertainty surrounding the Covid-19 situation, ART has retained about 15 per cent, or S$5 million of its income available for distribution to stapled securityholders, as rent negotiations are still ongoing and ART may grant further rental deferment and/or waivers to support some tenants through this challenging period, the managers said.

The H1 2020 distribution included a S$5 million top-up to mitigate the impact of Covid-19 on distributions and to share past divestment gains with stapled securityholders, they added.

According to the managers, the eventual distribution of the 15 per cent retained amount will depend on the final amount of income available for distribution based on the financial results for the full year ending Dec 31, 2020.

Beh Siew Kim, chief executive officer of the managers, said: "Given the risk of resurgence of Covid-19, we expect the revenue per available unit of our properties to remain under pressure in the near term. Nonetheless, ART remains well capitalised with sufficient liquidity to navigate through the crisis."

ART has about S$620 million in cash on-hand and unutilised credit facilities as at end June. In mid July, the stapled group received S$163.3 million from the sale of partial gross floor area of Somerset Liang Court Singapore and obtained an additional S$60 million in credit facilities, the managers said.

Separately, ART has entered into conditional agreements to sell its Guangzhou and Paris properties to two unrelated parties for S$191.4 million, its managers announced on Monday.

ART is the stapled group formed after the combination of real estate investment trusts Ascott Residence Trust (Ascott Reit) and A-HTrust.

As at June 30, ART's portfolio comprises 88 properties in 39 cities across 15 countries in the Asia-Pacific, Europe and the US.

Stapled securities of ART were trading at 90.5 Singapore cents as at 10.27am on Tuesday, down 1.5 cents or 1.6 per cent.