UPDATE: Ascott Residence Trust reports 3Q19 gross profit rose 1 percent

Citadines Trafalgar Square London, which is owned by Ascott Residence Trust and managed by its sponsor The Ascott Limited. Image credit: Ascott Residence TrustCitadines Trafalgar Square London, which is owned by Ascott Residence Trust and managed by its sponsor The Ascott Limited. Image credit: Ascott Residence Trust

This article was originally published on Wednesday, 30 October 2019 at 8:25 A.M. SGT; it has since been updated with more details.

Ascott Residence Trust reported Wednesday its third quarter gross profit increased 1 percent on-year to S$65 million on changes to accounting for leases, partly offset by lower revenue.

Revenue for the quarter ended 30 September fell 2 percent on-year to S$132.4 million, mainly on the divestment of Ascott Raffles Place Singapore, the trust said in a filing to SGX. Revenue missed a forecast from Daiwa.

The distribution per unit (DPU) was 1.91 Singapore cents, up 5 percent from 1.82 Singapore cents in the year-ago quarter, Ascott Residence Trust said.

Adjusted to exclude the divestment gain from Ascott Raffles Place Singapore and the year-ago contributions from the property, DPU was 1.73 Singapore cents, up 1 percent from 1.72 Singapore cents in the year-ago period, the trust said.

Daiwa had forecast net property income of S$70.7 million on revenue of S$137.3 million, with a DPU of 1.91 Singapore cents.

For the quarter, gross profit from Belgium and Spain rose 29 percent and 13 percent, respectively, in local currency terms, on stronger leisure demand, the filing said.

Gross profit from Vietnam rose 7 percent in local currency terms on higher corporate demand, while the U.K.’s gross profit increased 5 percent in pound terms on higher corporate and leisure demand, the filing said.

For the nine-month period, Ascott Residence Trust reported gross profit rose 6 percent on-year to S$187.3 million on revenue of S$380.9 million, up 1 percent on-year. The DPS for the nine-month period was 5.34 Singapore cents, up 7 percent from 5.01 Singapore cents in the year-ago period, the filing said.

In the outlook, the REIT pointed to its planned merger with Ascendas Hospitality Trust, with the combination expected to be completed by year-end.

“With a debt headroom of about S$1.1 billion, we have the capacity to pursue yield-accretive acquisitions, development and conversion projects. Post-combination, we will continue to have the mandate to acquire lodging assets in any part of the world,” Beh Siew Kim, the CEO of the REIT’s manager, said in the statement.

“Besides Asia Pacific, we will also keep a lookout for quality assets in Europe and the USA. lyf one-north Singapore, our maiden development project and coliving property, is on track to open in 2021. Post-completion of Ascott Reit’s combination with AHTRUST, we will review the combined portfolio to assess opportunities for asset enhancements to maximise returns,” she added.

But the REIT added that growth in international tourist arrivals may moderate amid ongoing trade tensions and soft economic indicators. In some markets, new hotel room supply is expected to outpace demand, the REIT said.

Ascott Residence Trust has a portfolio of 74 properties, with more than 11,700 units in 37 cities across 14 countries in the Asia Pacific, Europe and the U.S.

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