SINGAPORE (Jan 30): Ascott Residence Trust (ART) has reported a distribution per stapled security (DPS) of 2.27 cents for 4QFY2019 ended December 2019, some 6% higher than DPS of 2.15 cents a year ago.
The increase was largely attributable to the one-off divestment gain from Ascott Raffles Place Singapore.
Excluding one-off items, 4Q DPS would have been 6% lower than a year ago.
The 4Q DPS, which will be payable on Feb 10, 2020, brings ART’s DPS for year-to-date 2019 to 7.61 cents, 6% higher than DPS of 7.16 cents for the corresponding period a year ago.
4QFY2019 revenue dipped 2% to $134.1 million, from $136.5 million a year ago, on the back of the divestment of Ascott Raffles Place Singapore and Somerset West Lake Hanoi.
Gross profit rose 3% during the quarter to $65.3 million, due to the adoption of a new accounting standard with effect from January 2019.
On a same store basis and excluding the FRS 116 adjustments, gross profit decreased by $1.7 million in 4QFY2019.
This was despite higher gross profit for the Philippines, Belgium and Singapore, which increased by 42%, 38% and 20% respectively due to stronger demand. Meanwhile, gross profit for Vietnam grew 7% on higher corporate demand.
Unitholders’ distribution for 4QFY2019 rose 6% to $49.3 million, including a one-off partial distribution of divestment gain of $13.5 million to replace lost income and to share divestment gains with unitholders.
As at end-December, cash and cash equivalents stood at $275.5 million.
“The successful combination of ART and Ascendas Hospitality Trust at the end of 2019 has cemented ART’s position as the proxy hospitality trust in Asia Pacific with a total asset value of $7.4 billion,” says Bob Tan, chairman of the managers.
Tan notes that with an enlarged debt headroom of $1.5 billion, ART has greater capacity for more acquisitions, development or conversion projects.
Beh Siew Kim, chief executive officer of the managers, highlighted on Thursday that ART has entered into an agreement to acquire a prime freehold serviced residence in Australia for A$46.0 million ($42.2 million).
Located in Sydney’s second largest business district, the Quest Macquarie Park Sydney serviced residence (pictured above) will be under a master lease agreement.
“The annual rent under the master lease agreement provides an EBITDA yield of mid 5% and is also indexed at a 4% increase each year, subject to periodic market review,” Beh says. “[This] will add to our stream of stable income when the transaction completes by 1Q 2020.”
“Through proactive portfolio reconstitution, we have unlocked over $100 million in total net gains in 4Q 2019,” she adds. “We will continue to seek accretive investments in gateway cities while actively identifying opportunities to unlock the value of assets and redeploy the capital to higher-yielding properties.”
Speaking on the outbreak of the Wuhan coronavirus, Beh says the group will continue to monitor the situation closely and take more precautionary measures where necessary.
ART owns seven properties in China, including one in Wuhan – Citadines Zhuankou Wuhan. The group notes that the Wuhan property contributes less than 1% to ART’s total gross profit in 4QFY2019.
“Our geographically diversified portfolio with no concentration of earnings from any single market, as well as mix of stable and growth income streams, are expected to mitigate the impact,” Beh says.
Following the divestment of Citadines Xinghai Suzhou and Citadines Zhuankou Wuhan, which is expected to complete in 1HFY2020, ART’s portfolio in China will be reduced to five properties, which will contribute less than 5% of its total gross profit.
Meanwhile, Tan continues to eye ART’s inclusion into the FTSE EPRA Nareit Developed Index. “This will lead to higher trading liquidity and visibility to institutional investors, as well as a potential positive re-rating,” he adds.
Units in Ascott Residence Trust closed flat at $1.27 on Wednesday, after falling some 3.8% this week as the stock markets were rattled due to concerns over the outbreak of the Wuhan coronavirus.
