Ascott Residence Trust (ART) has guided, on Jan 15, that its distribution per stapled security (DPU) is expected to reduce by 60-70% from the 7.61 cents recorded for FY2019 ended December.
ART’s income available for distribution, similarly, is expected to decline by 40-50% from the $165.5 million in FY2019.
The lower figures are mainly due to the negative impact brought about by the Covid-19 pandemic, as the travel restrictions “significantly impacted” the operating performance of ART’s properties.
ART, which conducts valuation of all its properties annually, is expected to record a decline in the value of its portfolio for FY2020 by 6-8%.
This may result in unrealized fair value losses of $325 million to $345 million, resulting in a negative total return for FY2020 and a corresponding effect on ART’s net asset value (NAV) as at Dec 31, 2020. This is compared to the total return of $216.3 million in FY2019.
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The unrealised fair value losses, which are non-cash in nature, will not have any impact on ART’s income available for distribution.
The managers of ART says that the trust has a “strong financial position with sufficient liquidy” to meet its operating and financial commitments.
As at Sept 30, 2020, ART had some $305 million in cash on hand, and $550 million in undrawn credit facilities. Gearing remained low at 34.6%.
In addition, the managers have divested several properties at a premium to their book values.
“The sale proceeds would further strengthen ART’s financial capacity and flexibility to distribute part of the proceeds to stapled securityholders, pare down debt and/or finance potential acquisitions,” reads the statement via SGX.
“The Covid-19 situation remains fragile. While advances in vaccine development have brought renewed optimism, there is uncertainty around new strains of the coronavirus. As travel resumes, risks of a resurgence remain,” it adds.
Units in ART closed 1 cent higher or 0.9% up at $1.13 on Jan 15.
