Ascott Residence Trust (ART) has reported distribution per stapled security (DPS) of 2.045 cents for the 1HFY2021 ended June, 95% higher than DPS of 1.047 cents in the corresponding period the year before.
The surge in DPS was due to the trust’s active portfolio optimisation, says the manager.
Distributable income for the 1HFY2021 nearly doubled to $63.8 million, 96% higher than the $32.6 million posted in the 1HFY2020. The higher figure includes a one-off partial distribution of divestment gains of $20 million, which was shared with ART’s stapled securityholders.
The gains were included to replace income loss from the trust’s divested assets as well as to mitigate the impact of Covid-19 on distributions.
Distributable income for the half-year period also included termination fee income received and realised exchange gains.
ART says it may also grant further rental deferment and, or waivers to support tenants during this “challenging period”.
ART previously included a $5.0 million top-up in its 1HFY2020 distribution.
Revenue for the 1HFY2021 fell by 11% y-o-y to $185.0 million due to absence of contribution from ART’s six properties, which were divested at a premium to book value. The lower revenue was also attributable to lower revenue derived from its existing portfolio, and offset by the additional contribution of $3.6 million from Quest Macquarie Park in Sydney, Australia, Paloma West Midtown in Georgia, US, as well as three rental housing properties in Sapporo, Japan.
1HFY2021 gross profit fell 7% y-o-y to $82.1 million, which comprised contribution from properties on master leases, properties on management contracts with minimum guaranteed income and from properties on management contracts.
A provision of $5.3 million has been made in the 1HFY2021 for Park Hotel Clarke Quay's outstanding rents and the master lease expiring in 2023 that will subsequently be terminated.
On a same-store basis, revenue and gross profit for the 1HFY2021 fell by 7% and 1% y-o-y respectively.
Revenue per available unit (RevPAU) for the 1HFY2021 fell 14% y-o-y to $60. The trust’s portfolio RevPAU has increased over four straight quarters since 2QFY2020, with an 18% increase from 1QFY2021 to 2QFY2021.
On a same-store basis, revenue and gross profit for the 2QFY2021 stood 45% and 56% higher respectively compared to the 2QFY2020.
There are no master leases expiring in 2021.
In its results statement, ART announced that it was in the process of repossessing Park Hotel Clarke Quay and that its managers are assessing options for the property’s operations.
“ART’s predominantly long-stay properties, geographically diverse portfolio and presence in large domestic markets offer resilience and it is well-placed to benefit as the global economy recovers,” says Bob Tan, chairman of the managers.
“ART has been actively reconstituting and enhancing our portfolio by redeploying divestment proceeds into higher-yielding and long-stay assets to increase stable income and create greater value for our stapled securityholders,” adds Tan, who revealed that ART had received about $580 million in proceeds from the divestment of its six properties at about a 2% average exit yield.
“In 1HFY2021, our total investments of about $285 million were at an average EBITDA yield of about 5%,” says Tan.
“With about $140 million remaining in divestment proceeds and a debt headroom of $1.9 billion, ART has a strong financial capacity to seek investment opportunities in more long-stay lodging assets to deliver sustainable, long-term value to our stapled securityholders. ART aims to expand our asset allocation in rental housing and student accommodation properties from about 9% currently to about 15-20% of our total property value in the medium term,” he adds.
“The initial phase of recovery remains largely driven by the domestic and essential corporate travel segments, and the return of international demand may be more gradual. ART’s properties in China continued to lead the recovery with higher corporate demand while properties in Europe benefitted from leisure demand brought on by the summer season. The block bookings at our properties in Australia, Singapore and US, as well as the long stays in Indonesia, Philippines and Vietnam continued to offer stability,” says Beh Siew Kim, CEO of the managers.
“ART’s expansion of our rental housing and student accommodation portfolios will generate greater stable returns. The three Japan rental housing properties we acquired in June 2021 will immediately contribute stable income, given their long leases of about two years and high occupancy rates. The average EBITDA yield of the three rental housing properties is approximately 4%. Our first student accommodation asset, Paloma West Midtown is 97% pre-leased for the Fall 2021 semester, in line with pre-pandemic pre-leasing rates,” she adds.
“Our second student accommodation asset in South Carolina, US which we will jointly develop with our sponsor, The Ascott Limited, has a target stabilised EBITDA yield of about 6.2%.“
ART will be rejuvenating its portfolio with four projects in Singapore and the US undergoing asset enhancement or development.
Its maiden development project and coliving property, lyf at one-north Singapore is expected to be completed in 4Q2021.
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In the US, the trust’s refurbishment of its Hotel Central Times Square in New York is expected to launch in 4Q2021.
The DPS will be payable on Aug 27.
Units in ART closed flat at $1.01 on July 26.
Photo: ART
