The manager of Ascott Residence Trust (ART) says the 1QFY2021 ended March saw improvement in ART's operating performance despite a seasonal lull.
In its business update dated April 29, the manager reported portfolio revenue per available unit of properties (RevPAU) climbed 10% q-o-q to $55, supported by block bookings, domestic leisure demand and a gradual pick-up in corporate activity from March.
On a y-o-y basis, RevPAU was 47% lower than the previous year’s 1Q.
Nonetheless, the manager points out that the 1QFY2021 continues a sequential q-o-q improvement since 2QFY2020, despite a resurgence in Covid-19 cases in some countries during the winter and a seasonally softer quarter for corporate travel.
Out of its operating markets, the manager notes China continues to lead the way in recovery with stable yo-y RevPAU for the 1QFY2021.
Longer-stay properties such as rental housing and student accommodation registered occupancies exceeding 95%. Markets with long stays such as Indonesia, Philippines and Vietnam were also more resilient with smaller RevPAU declines y-o-y.
While 10 of ART’s properties (12% of the portfolio) remain closed, 6 of them are on master leases and continue to receive fixed rent, while ART plans to progressively reopen the closed properties in 2QFY2021 fore the summer holiday season.
No master leases will be expiring in 2021, though the manager notes that relief has been extended to some lessees and other rental negotiations are ongoing.
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In addition, the manager highlights that distributable income for the quarter was boosted by termination fees of $9.8 million and a one-off realised exchange gain of $5.6 million.
ART’s biggest market Japan (20% of its portfolio) showed a 15% q-o-q decline in RevPAU due to the divestment of Somerset Azabu East Tokyo and Japan’s state of emergency during 1Q. Demand is expected to remain dampened as the state of emergency has been reintroduced from April 26 through to early May.
For Singapore (16% of portfolio), RevPAU increased 14% q-o-q as government bookings for self-isolation supported demand. Australia (15% of portfolio) showed the biggest improvement with a 46% jump in RevPAU q-o-q, also on the back of government bookings.
Looking ahead, the manager states it plans to redeploy capital towards high-yielding, stable income assets such as longer-stay asset classes, as well as enhancement projects.
In terms of market outlook, the manager expects continued challenging market conditions given the resurgence of Covid-cases and new variants of the virus resulting in movement restrictions in some of its markets.
Stable income sources and long stays are expected to cushion the impact in the interim.
“With its scale, diversification, predominantly extended-stay portfolio and strong financial capacity & flexibility, ART is well-positioned to capture the upturn,” the manager states.
Units in ART close 1 cent or 0.95% higher at $1.06 on April 28.
