Ascott Residence Trust first-half DPS up 14% on travel recovery boost

SINGAPORE (THE BUSINESS TIMES) – The return of global travel has lifted the fortunes of Ascott Residence Trust (ART), as it recorded a 14 per cent rise in distribution per stapled security (DPS) to 2.33 cents for the first half ended June.

Revenue for the period rose 45 per cent year on year to $267.4 million, translating to a 44 per cent increase in gross profit to $118.2 million. This was driven by a higher average daily rate and average occupancy rate, with the latter rising to 70 per cent in the second quarter, from 50 per cent in the previous quarter. Revenue per available unit also saw a strong 60 per cent increase to $96.

ART enjoyed greater contributions from its expanded portfolio of longer-stay assets, comprising student accommodation and rental housing properties, and the newly opened lyf property at one-north.

Its seven student accommodation properties in the United States and three rental housing properties in Japan acquired over the last year have an average occupancy rate of more than 95 per cent.

Some 32 per cent of ART’s first-half gross profit was income from management contracts of serviced residences and hotels. The remainder came from “stable income” sources, including master leases, management contracts with minimum guaranteed income, rental housing and student accommodation properties

The trust’s distributions in the first half were up 20 per cent to $76.7 million, including realised exchange gains from repaying foreign currency bank loans. Excluding one-off items, ART’s adjusted DPS rose 120 per cent to 1.78 cents.

Mr Bob Tan, chairman of ART’s two managers, said that its serviced residences and hotels have contributed more growth income with the recovery in travel.

“This builds upon the steady income stream from our strong foundation of longer-stay assets. ART’s diversified and resilient portfolio remains poised for further growth.

“In addition, our robust financial position gives us the capacity to achieve our asset allocation target of 25 per cent to 30 per cent in longer-stay assets and 70 per cent to 75 per cent of our portfolio in serviced residences and hotels,” he said.

Looking ahead, ART has two properties under development. The student accommodation, Standard at Columbia, in the US is expected to be completed in the second quarter of 2023. Construction of the new Somerset serviced residence at the Liang Court site remains on track for completion in the second half of 2025.

The counter closed at $1.17 on Thursday, up 1.7 per cent or two cents, before the announcement.