Ascott Residence Trust reports 52% lower DPS of 1.99 cents for 2H20 on lower revenue, gross profit

SINGAPORE (EDGEPROP) - The manager of Ascott Residence Trust (ART) has reported distribution per stapled security (DPS) of 1.99 cents for the 2HFY2020 ended December, some 52% lower than DPS of 4.18 cents posted in the corresponding period a year ago. The decrease was largely due to the negative impact brought about by the Covid-19 pandemic.

The 2HFY2020 DPS, which will be payable on Feb 26, brings ART’s DPS for FY2020 or year-to-date 2020 to 3.03 cents, which is 60% lower than DPS of 7.61 cents a year ago.

2HFY2020 revenue fell 39% y-o-y to $161.4 million due to the lower revenue from the divestment of Somerset Liang Court and Somerset West Lake Hanoi, as well as overall lower revenue from its existing portfolio. The lower figure was mitigated slightly by additional contribution from the acquisition of the A-HTRUST portfolio and Quest Macquarie Park Sydney.

Revenue per available unit (RevPAU) for the 2HFY2020 fell 69% y-o-y to $49. Gross profit plunged 53% y-o-y to $61.0 million due to the lower revenue. This was partially offset by lower operating costs from cost savings and government related measures.

On a same store basis, gross profit declined by $87.3 million in 2HFY2020, due to lower gross profit from ART’s master leases in Australia, France, Germany, and mitigated slightly by its Singapore portfolio. Overall management contracts in ART’s properties saw losses for the same period as well.

Unitholders’ distribution for 2HFY2020 fell 32% y-o-y to $61.7 million, bringing total distribution to unitholders for FY2020 to $94.2 million, down 43% y-o-y. The distribution for 2HFY2020 includes the $5.0 million retained in 1HFY2020, as well as a one-off partial distribution of divestment gain of $40 million to soften the impact of Covid-19 on distributions.

Including the $5.0 million partial distribution of divestment gains in 1HFY2020, ART has distributed a total of $45.0 million in divestment gains for the FY2020. The lower overall performance of ART translates to a total loss of $254.8 million for the 2HFY2020, compared to the $3.4 million in returns for the same period a year ago.

As at Dec 31, 2020, cash and cash equivalents stood at $483.9 million, higher than the $270.0 million in the same period a year ago. The higher amount, according to ART, was due to the proceeds received from divestments and cash generated from operations. As at Dec 31, 2020, ART owns 86 assets across 15 countries and 38 cities.

In addition, ART says it has acquired its first purpose-built student accomodation (PBSA). On Jan 27, the trust announced that it will acquire Signature West Midtown, a freehold 183-unit student accommodation asset in Atlanta, Georgia in the US for US$95 million (S$126.3 million). The transaction is expected to be completed by end 1Q2021.

It has three projects slated for development or asset enhancement, including the commencement of project planning for the new Somerset serviced residence at Liang Court, Singapore. Its development project and co-living property, lyf one-north Singapore is expected to be completed in 4QFY2021.

“ART’s properties that cater predominantly to the long-stay customer segment, our geographically diversified presence, and mix of stable and growth income streams have helped to cushion the impact of Covid-19 on ART’s financial performance,” says Bob Tan, chairman of the managers.

He noted that about two-thirds of ART’s gross profit came from master leases and management contracts with minimum guaranteed income, which provided the trust with “more stability”. “As part of our capital recycling strategy, we have divested two properties at the end of last year with two more to be completed in 1QFY2021, all at a premium to their book values. Proceeds from the sale of these properties will be deployed into higher yielding assets,” he adds.
Beh Siew Kim, CEO of the managers, says, “We continue to actively reconstitute and enhance ART’s portfolio as we remain disciplined in managing our capital and costs. The student accommodation asset we have acquired has strong domestic demand with high average occupancy rate of 95% despite Covid-19 and will add an approximate 4.4% to DPS for FY2020 on a pro forma basis.”“Despite the near-term headwinds, there is significant pent-up demand for travel. The domestic, leisure and free independent segments are expected to continue to lead the recovery. As vaccinations become widely available, travel is expected to resume. In the meantime, we have proactively sourced for alternative businesses such as guests looking for spaces to work-from-home to supplement our long-stay business, and increased our digitalisation initiatives,” she adds.

Units in ART closed 2 cents lower or 1.9% down at $1.03 on Jan 26.