Singapore REITs' distributions fall

Ascott Residence Trust Reports A 69% Year-on-Year Decrease In H1 DPU

July 29, 2020 — Ascott Residence Trust (ART) reported a distributable income of S$32.6 million in 1H 2020 amidst the COVID-19 pandemic. This was 56% lower compared to 1H 2019. It included a S$5.0 million top-up to mitigate the impact of COVID-19 on distributions and to share past divestment gains with stapled securityholders. Distribution per stapled security for 1H 2020 is 1.05 cents, a 69% year-on-year decrease compared to 3.43 cents in 1H 2019.

ART’s revenue declined by 16% to S$208.5 million while gross profit declined by 28% to S$88.6 million. This was mainly attributed to the decrease in contributions from the divestment of Ascott Raffles Place Singapore and Somerset West Lake Hanoi and lower revenue from the existing portfolio. The decrease was partially offset by the additional income contribution from ART’s successful combination with Ascendas Hospitality Trust in December 2019, and the acquisition of Quest Macquarie Park Sydney and Citadines Connect Sydney Airport in February 2020 and May 2019 respectively. In 1H 2020, ART’s revenue per available unit (RevPAU1) decreased by 52% to S$70.

In 1H 2020, 21 of ART’s properties were temporarily closed either due to government mandate or weak accommodation demand. However, lower operating costs from cost containment and government support measures further contributed to offset the decline in gross profit. While 12 properties have since reopened and seven more are scheduled to reopen in 3Q 2020, operators and lessees of ART’s properties continue to face operating challenges brought about by the COVID-19 pandemic.

Mr Bob Tan, Chairman of Ascott Residence Trust Management Limited and Ascott Business Trust Management Pte. Ltd. (the Managers of ART), said: “ART’s financial performance in 1H 2020 has been adversely impacted by global lockdowns and movement restrictions as a result of the COVID-19 pandemic. However, ART’s geographically diversified portfolio and focus on the long-stay segment have helped to buffer some of the impact. ART remains in a strong financial position. We will continue to strengthen ART’s financial position through active portfolio management and capital recycling, and exercise prudence in managing our capital and cashflow. ART’s inclusion in the FTSE EPRA Nareit Global Real Estate Index2 (Global Developed Index) in June 2020 has also raised ART’s profile as the proxy hospitality trust in Asia Pacific, broadening ART’s reach amongst global investors and increase our trading liquidity. ART remains committed to delivering sustainable, long-term value to our stapled securityholders.”

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