ARA US Hospitality Trust (ARA H-Trust) has recorded net property income (NPI) of US$9.1 million ($12.3 million) for the 1HFY2021 ended June, reversing from a loss of US$2 million in the 1HFY2020.
On a sequential basis, ARA H-Trust reversed from a loss of US$3 million for the 2HFY2020.
The trust achieved gross revenue of US$52.8 million for the 1HFY2021, surging up 34.4% y-o-y from US$39.3 million previously on the back of easing travel restrictions in the US following widespread distribution of vaccines, prompting a recovery in domestic travel.
ARA H-Trust's portfolio average occupancy was 51.2% during the period, improving from 43.2% the year before, while revenue per available room (RevPAR) increased from US$48 to US$52 y-o-y.
See also: ARA H-Trust reports NPI of US$0.4 mil in 1Q business update
The higher revenue contributed to a higher gross operating profit of US$14.1 million for the period, more than double the US$5.8 million recorded the previous year.
Despite the improved performance, after deducting loan interest, other trust expenses, and reserves set aside for capital expenditure, ARA H-Trust reported nil distributable income in 1HFY2021.
Net asset value (NAV) per stapled security as at June 30 stood at 61 US cents, compared to 62 US cents as at Dec 31, 2020. The slight decrease is mainly due to accounting depreciation of the properties, partially uplifted by the income generated from hotel operations in 1H2021.
“We navigated through the crisis and rose above the challenges amidst the pandemic by leveraging on the Trust’s quality portfolio, in-market knowledge and our extensive hotel experience. The ARA H-Trust portfolio is on the path of a strong comeback in 1H 2021 and we believe that the portfolio’s performance will continue to strengthen as we progress into the peak summer season,” says Lee Jin Yong, CEO of ARA H-Trust’s managers.
As at June 30, ARA H-Trust has US$26.5 million in cash on-hand and an aggregate leverage of 49%, which remains below the regulatory limit of 50%. There are no refinancing requirements on ARA H-Trust’s loan facilities until 2022. The managers have secured loan covenant waivers from Singapore-based relationship banks up to December 2021.
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Looking ahead, the managers of ARA H-Trust anticipate a further rebounding of the US hospitality market heading into the summer season, with leisure travel demand expected to accelerate. Rising weekday occupancies also indicate emerging signs of return for business travel demand, as companies have started to ask employees to return to the office and approved corporate travel.
“As our portfolio is oriented towards domestic leisure and business travelers, we anticipate that the trust’s performance will be in the vanguard of the US hospitality market recovery. We continue to stay vigilant and nimble as the pandemic stretches on and remain focused to chart the path forward to create long-term value for our Stapled Securityholders,” says Lee.
Units in ARA H-Trust closed 0.5 US cents or 0.93% lower at 53.5 US cents on August 4.
Photo: Bloomberg
