Ascendas Hospitality Trust fiscal 2Q net property income fell nearly 8 percent on Australia market

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Ascendas Hospitality Trust reported on Wednesday that its fiscal second quarter fell 7.5 percent on-year to S$20.5 million on challenging market conditions for the Australia portfolio and a 7 percent depreciation in the Australian dollar against the Singapore dollar.

“Amidst new supply of rooms in Sydney, Pullman Sydney Hyde Park and Novotel Sydney Central managed to maintain a high average occupancy at close to 90 percent but were affected by lower room rates,” the trust said. “The hotels in Melbourne and Brisbane also had healthy occupancy at around mid-80 percent. However, lower room rates and loss of conferences and events (C&E) business affected the performance of these hotels.”

Revenue per available room (RevPAR) for the Australia porfolio fell 4.7 percent on-year in the fiscal second quarter, it said.

It noted the Japan portfolio showed “resilience” with only marginally weaker results on-year despite a powerful earthquake striking Osaka and a strong typhoon that temporarily closed the Kansai International Airport. RevPAR for the Japan portfolio was down 5.0 percent on-year in the quarter, but net property income fell just 1.6 percent on-year in Singapore dollar terms, it said.

Gross revenue declined 11.9 percent on-year in the quarter ended 30 September to S$46.4 million, it said in a filing to SGX after the market close on Wednesday.

Income available for distribution in the fiscal second quarter rose 3.6 percent on-year to S$17.8 million, on savings in net finance costs and the partial distribution of proceeds from divesting two hotels in Beijing, Ascendas Hospitality Trust said.

The distribution per stapled security (DPS) rose 2.8 percent on-year in the quarter to 1.46 Singapore cents from 1.42 Singapore cents in the year-ago quarter, it said.

For the fiscal first half, net property income fell 6.9 percent on-year to S$39.2 million and gross revenue decreased 9.3 percent on-year to S$91.3 million, it said. DPS for the six months ended 30 September was 2.81 Singapore cents, up 2.9 percent on-year from 2.73 Singapore cents in the year-ago half year, it said.

The ex-distribution date will be 7 November and the distribution date will be 7 December, it said.

Outlook

In its outlook, Ascendas Hospitality Trust said the soft market conditions in Sydney were likely to persist in the near term, while Melbourne’s hotel market is faced with a large supply of new rooms in the years ahead.

“While the Australia portfolio is currently going through a challenging period, we continue to be positive on the longer term prospects of the Australian markets we are in. Sydney and Melbourne are key financial centers and popular leisure destinations, while Brisbane is also expected to benefit from the significant infrastructure investments in the city,” Tan Juay Hiang, CEO of the trust’s manager, said in the statement.

“The diversity of the portfolio will also benefit A-HTRUST as its hotels in Seoul and Singapore are expected to benefit from the recovering hotel markets in these cities. While the Japan market experienced a temporary setback due to recent events, the Japan portfolio showed resilience and Japan remains a key market for us,” Tan added.

Ascendas Hospitality Trust has a portfolio of 12 hotels with more than 4,000 rooms across Australia, Japan, South Korea and Singapore, it said.

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