Ascott Residence Trust: 1Q22 rental and student housing contribution jumped

In November 2021, Ascott Residence Trust (ART) announced it would acquire a freehold 548-bed student accommodation asset, named Seven07 in Champaign, Illinois, U.S. Credit: Ascott Residence TrustIn November 2021, Ascott Residence Trust (ART) announced it would acquire a freehold 548-bed student accommodation asset, named Seven07 in Champaign, Illinois, U.S. Credit: Ascott Residence Trust

Ascott Residence Trust (ART) said Friday its portfolio of rental housing and student accommodation contributed around 28 percent of gross profit in the first quarter, up from around 12 percent in the year-ago period.

Last year, the REIT said it was shifting its strategy to acquire assets with longer lengths of stay, diversifying its portfolio from traditional hospitality properties. Longer-stay accommodation properties have performed better during the pandemic than traditional hospitality, which is more dependent on travelers and tourism.

The rental housing segment’s average occupancy was above 95 percent in the January-to-March quarter, despite a surge in cases of the Covid-variant Omicron, the REIT said in a filing to SGX.

For the student accommodation properties, the REIT posted the first full-quarter contribution from four U.S. properties acquired in the fourth quarter of 2021; the properties were fully occupied despite the Omicron surge, the REIT said.

The student accommodation properties are seeing a “favourable pacing” for pre-leasing ahead of the next academic year, ART said, adding it expected rent growth of around 5 percent on-year.

Currently, around 17 percent of the portfolio is in rental housing and student accommodation, with the remainder in serviced residences and hotels, the REIT said. ART said it is targeting around 25 percent to 30 percent in the longer-stay accommodation segment for stable income, and around 70 percent to 75 percent in serviced residences and hotels to benefit from the travel recovery as countries ease their Covid-related restrictions.

Overall, revenue and gross profit increased in the first quarter from the year-ago period on newly acquired properties and the portfolio’s stronger operating performance, Ascott Residence Trust said, without providing exact figures.

Revenue per available room (RevPAR), which excludes rental housing and student accommodation, jumped 22 percent on-year in the quarter to S$67 from S$55 a year earlier despite increased Covid-related restrictions in January and February amid a strong pick-up in demand in March, the REIT said.

In its outlook, the REIT cited expectations for a travel recovery this year, barring any new Covid variants or protracted case resurgence.

“Forward bookings at ART’s properties indicate a sustained underlying demand from leisure and corporate travel segments, with some uplift expected from events and conventions,” the REIT said. The “pace of recovery is expected to remain varied and largely driven by the domestic segment, with Europe and USA leading the recovery.”

Read more details of Ascott Residence Trust’s first quarter update.