Ascott trust unit price up as Q4 DPU surges

Singapore

SERVICED apartment play Ascott Residence Trust traded 1.5 cents higher at S$1.285 after reporting a 62 per cent year-on-year surge in fourth-quarter distribution per unit (DPU) to 2.16 cents.

The trust, which pays distribution semi-annually, will distribute 4.264 cents per unit for the second half of 2014, up 15 per cent. Net asset value at end-2014 was S$1.37.

Adjusting for rights issue effects and excluding one-off items, the DPU was 1.76 cents for the fourth quarter ended December 31, 2014, up 13 per cent from a year ago.

Full-year DPU dipped 2 per cent to 8.2 cents. On an adjusted basis, it was 7.61 cents, up 6 per cent.

Looking ahead, the Reit expects to grow steadily from acquisitions and renovations of existing properties. Hopes are for 2015 to be as busy as 2014, Ronald Tay, CEO of the Reit manager, told The Business Times in a phone interview.

Ascott acquired nine assets with 1,800 apartment units for S$559 million in 2014, across countries like Japan and China. "We still like London in Europe, it's one of the bright sparks. We're also hoping to do more acquisitions in key cities in Germany," he said.

In Vietnam, where there is an oversupply of serviced apartments and office space in Hanoi, full-year revenue fell from S$40.5 million to S$37.9 million. "This year, the pace of new supply is tapering off, hopefully," he said.

For the whole of 2014, revenue was up 13 per cent from S$317 million to S$357 million. This was due mostly to acquisitions in the last two years, partially offset by the lack of income from a Beijing property on sale and the expiry of yield protection for a Hanoi property. About S$9 million of the revenue increase was contributed by stronger performance in existing properties in the UK, Belgium and Japan.

However, revenue per available unit per day fell 3 per cent to S$128 from S$132 a year ago. This was due to weaker performance from Singapore and the Philippines and lower average daily rates in China due to properties from second-tier cities acquired in 2014. "In Singapore this year, I am more bullish compared to Vietnam. With the 50th anniversary, there will be a lot of parties and events, as well as the SEA (South-east Asian) Games," Mr Tay said.

At end-2014, the Reit, which operates under the Ascott, Somerset and Citadines brands, held 90 properties with about 10,500 apartment units across Asia and Europe. Including assets held for sale, Ascott's properties were worth S$3.8 billion at end-2014. Occupancy rates for the global portfolio are being maintained at 80 per cent, Mr Tay said.

He does not expect business to be affected even if the Urban Redevelopment Authority (URA) allows private homes to be rented out for short-term stays. The URA is currently reviewing its rules which require stays of at least six months in private flats. Ascott's customers typically stay between one to three months. "We focus on the corporate traveller, not on leisure travellers or tourists," he said.

Mr Tay added that he does not expect the URA rules to be relaxed anytime soon given some oversupply in the hotel market.