SINGAPORE (July 20): The managers of ARA US Hospitality Trust (ARA H-Trust) have announced distribution of stapled security (DPS) of 1.36 US cents for the reporting period starting from its listing date on May 9 to end June, some 3.8% higher than the IPO forecast of 1.31 US cents.
ARA H-Trust recorded distributable income of US$7.7 million ($10.6 million) for the maiden reporting period, outperforming its IPO forecast of US$7.4 million by 3.2%.
The higher distributable income was mainly due to higher net property income (NPI) and lower borrowing costs.
Gross revenue was 1.3% lower than forecast at US$28.8 million, led by lower room revenue.
Portfolio occupancy remained at 82.8% with an average daily rate (ADR) of US$126.
Property expenses was lower compared to forecast as a result of various expense management initiatives, including productivity improvements in labour management and energy expense savings.
Consequently, ARA H-Trust recorded NPI of US$9.9 million for the reporting period, marginally higher than the forecast of US$9.8 million.
Net finance costs were 12.5% lower than forecast at US$1.4 million, mainly due to lower interest rates, interest income from fixed deposits and the repayment of US$7.5 million revolving credit facility in May.
The group net asset value (NAV) per stapled security and net tangible asset (NTA) per stapled security at 0.87 US cents as at June 30, 2019.
As at end June, gearing was 31.9%, compared to 33.4% at IPO. Cash and cash equivalents stood at US$40.5 million.
“Our DPS outperformed forecast by 3.8% and the portfolio recorded a RevPAR Index of 106.8%, reflecting the superior performance and attractiveness of our quality portfolio compared to their respective competitive sets,” says Lee Jin Yong, CEO of the managers.
“The US economy continues to exhibit stable positive growth which bodes well for the hospitality industry,” he adds.
Looking ahead, the managers remain positive about their asset management initiatives to optimise revenue management and improve sales production.
The managers add that the acquisition pipeline remains robust and they are evaluating several potential off-market and marketed transactions.
Barring unforeseen circumstances, the managers expect distributable income for ARA H-Trust’s maiden distribution – for the period from May 9 to Dec 31, 2019 – to be in line with its IPO forecast.
The first distribution is expected to be paid on March 31, 2020.
As at 12pm, units in ARA H-Trust are trading half a US cent higher, or up 0.6%, at 89 US cents.
