A-HTrust's 1Q DPS up 3.1%, lifted by divestment

Singapore

ASCENDAS Hospitality Trust's (A-HTRUST) distribution per stapled security (DPS) for the first quarter ended 30 June rose 3.1 per cent to 1.35 Singapore cents, thanks to the partial distribution of the proceeds from divesting two hotels in Beijing, and lower net finance costs.

However, gross revenue and net property income (NPI) both slid lower on the back of reduced contributions from its portfolio in Australia, foreign exchange translations and from the partial loss of income due to the divestment. In particular, the Australian dollar and the Japanese dollar both depreciated against the Singapore dollar.

Gross revenue was down 9.8 per cent to S$48.2 million, while NPI declined 9.3 per cent to S$20.2 million. Income available for distribution (less income retained for working capital) was 3.8 per cent higher at S$15.3 million.

A-HTRUST highlighted that the proceeds from the divestment was used to pare bank borrowings as well as to fund a recent acquisition of The Splaisir Seoul Dongdaemun hotel in South Korea in May this year.

The average occupancy of its hotels under management agreements dipped 1.2 percentage points to 82.1 per cent, while the average daily rate fell 2.9 per cent to A$165. Meanwhile, revenue per available room (RevPAR) was 3.5 per cent lower at A$136.

It flagged that the hotels in Sydney mostly contributed lower NPI due to weak market conditions, while its hotel in Melbourne was affected by softer conferences and events demand in the city.

For its hotels under master leases, any variable rent for Hotel Sunroute Ariake in Japan is only payable in the fourth quarter of the financial year. As such, the extension of the master lease to the serviced apartment component of Hotel Sunroute Ariake resulted in a slightly lower NPI for 1QFY18/19 from the hotel owing to the absence of variable rent in the quarter, it explained.

Hotel Sunroute Osaka Namba posted a year-on-year improvement following the renovation of its rooms, while The Splaisir Seoul Dongdaemun started contributing to A-HTRUST after the completion of the acquisition on May 21.

In Singapore, Park Hotel Clarke Quay continued on a growth path, contributing a higher NPI by 6 per cent, as the injection of new hotel rooms tapers in the industry.

Tan Juay Hiang, chief executive of the Managers, said: "We are pleased to be able to seek out accretive acquisitions in keeping up the growth momentum. The divestment resulted in a significant increase in net asset value per stapled security to S$1.01, and lowered our gearing ratio to 23.7 per cent, providing headroom for further acquisitions to support growth."

He added that while some of its hotels Down Under are experiencing challenges, it continue to be confident in the long term prospects of Australia's hospitality market.

In 1Q FY18/19, its weighted average interest rate eased to 2.4 per cent from 2.8 per cent a year ago. As at June 30, the proportion of borrowings on fixed rates stood at 90.5 per cent.

A-HTRUST is a stapled trust comprising Ascendas Hospitality Real Estate Investment Trust and Ascendas Hospitality Business Trust.

Units in A-HTRUST closed at 81 Singapore cents on Thursday, up half a cent.