Ascott REIT’s 2Q 2019 Distribution per unit rises 8% to 1.98 cents

SINGAPORE – Ascott Residence Trust’s (Ascott Reit) 2Q 2019 distribution per unit (DPU) grew 8% to 1.98 cents as compared to 2Q 2018.

Unitholders’ distribution for the quarter also increased 8% to S$43.1 million, which included a realised exchange gain of S$3.1 million arising from the repayment of foreign currency bank loans with the divestment proceeds from Ascott Raffles Place Singapore.

Revenue for 2Q 2019 increased 2% to S$132.5 million, which was mainly attributed to additional revenue from the acquisition of Citadines Connect Sydney Airport in May 2019 and higher revenue from the existing properties in the Philippines, United Kingdom and Japan.

Gross profit for 2Q 2019 climbed 7% from 2Q 2018 to S$67.6 million due to higher revenue and adoption of accounting standard FRS 116 Leases with effect from 1 January 2019. On a same-store basis excluding FRS 116 adjustments, gross profit increased by S$0.2 million.

Mr Bob Tan, Ascott Residence Trust Management Limited’s (ARTML) Chairman, said: “Ascott Reit’s DPU continued to grow steadily in the second quarter, affirming our proactive efforts to enhance the quality of our portfolio, and Ascott Reit’s strength as the most geographically diversified REIT listed in Singapore. In the first half of this year, we divested Ascott Raffles Place Singapore at 64% above book value and acquired Citadines Connect Sydney Airport, a prime business hotel. We will continue to focus on delivering stable returns to unitholders and maintain a balance of stable and growth income.”

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In 2Q 2019, Ascott Reit’s diversified portfolio spans 14 countries, with the Asia Pacific contributing 49% to gross profit and 51% is from Europe and the United States of America.

Approximately 40% of the gross profit for 2Q 2019 was contributed by stable income from properties on master leases and properties on management contracts with minimum guaranteed income, while the remaining was from properties on management contracts.

Mr Tan added: “With our recent proposed combination of Ascott Reit and Ascendas Hospitality Trust (A-HTRUST), we expect higher stable income for the combined entity at 46% of gross profit. Ascott Reit’s DPU is expected to grow 2.5% on an FY 2018 pro forma basis through the combination. With a debt headroom of about S$1 billion for the combined entity, we will have the financial capacity to pursue more accretive acquisitions and undertake development or conversion projects to enhance portfolio value. We will look at opportunities from both our sponsor The Ascott Limited and third parties.”

lyf one north Singapore. Picture: Ascott

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Ms Beh Siew Kim, ARTML’s Chief Executive Officer, said: “As part of our ongoing asset enhancement initiatives to enrich the customer experience, we have completed the refurbishment of Ascott Makati, Somerset Grand Citra Jakarta and Element New York Times Square West and expect to see an uplift in average daily rates. Excavation and piling works have begun for lyf one-north Singapore, our maiden development project and coliving property, and it is on track to open in 2021.”

Ascott Makati. Picture: Ascott

Ascott Reit continued with its disciplined and proactive capital management strategy, with 88% of Ascott Reit’s borrowings on fixed interest rates. As at 30 June 2019, Ascott Reit’s gearing was 32.8%, way below the 45% gearing threshold set by the Monetary Authority of Singapore. Its effective interest costs remained low at 2.1%.

Ascott Reit announced on 3 July 2019 the proposed combination of Ascott Reit and A-HTRUST to form Asia Pacific’s largest hospitality trust and the world’s eighth-largest with an asset value of S$7.6 billion.

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This article is contributed by Ascott.