Ascott Residence Trust Review @ 14 August 2022

Basic Profile & Key Statistics

• Main Sector(s): Hospitality
  
• Country(s) with Assets: Australia, United States, Japan, England, Singapore, France, China, Vietnam, Philippines, Germany, Indonesia, Belgium, Spain, South Korea, Malaysia
• No. of Properties (exclude development/associate/fund): 93

Key Indicators

Performance Highlight

Revenue, gross profit, distribution and DPS have improved yoy mainly due to improved performance and contribution from new properties. 

Revenue per Available Unit

RevPAU has improved gradually following the lifting of travel restrictions among multiple countries.

Acquisition

In 1H 2022, ART completed the acquisition of 2 student accommodations in U.S. and Japan. The remaining 4 properties in Japan are expected to complete between 4Q 2022 and 2Q 2023. 

Development

2 developments are on-going where Somerset serviced residence is expected to complete in 2H 2025 and the U.S. student accommodation is expected to complete in 2Q 2023.

Related Parties Shareholding

• REIT sponsor's shareholding: Above median for more than 20%
• REIT manager's shareholding: Above median for more than 20%
• Directors of REIT manager's shareholding: Below median for more than 20%

Lease Profile

• Income in SGD/Major Currencies : Below median for more than 10%
• WALE: Above median for more than 20%
• Highest lease expiry within 5 years: Above median for more than 20%; Falls in 2026 and beyond, without breakdown
• Weighted average land lease expiry: Above median for more than 10%

Debt Profile

• Gearing ratio: ± 10% from median
• Gearing including perps: Above median for more than 10%
• Cost of debt: Below median for more than 20%
• Fixed rate debt %: ± 10% from median
• Unsecured debt %: Below median for more than 20%
• WADM: Above median for more than 10%
• Highest debt maturity within 5 years: Below median for more than 10%; Falls in 2026 and beyond, without breakdown
• Interest coverage ratio: ± 10% from median

Diversification Profile

• Top geographical contribution: Below median for more than 20%
• Top property contribution: Below median for more than 20%
• Top 5 properties' contribution: Below median for more than 20%
• Top tenant contribution: ± 10% from median
• Top 10 tenants' contribution: Below median for more than 20%

Key Financial Metrics

• Property yield: Below median for more than 20%
• Management fees over distribution: Above median for more than 20%; $5.56 distribution for every dollar paid 
• Distribution on capital: Below median for more than 20%
• Distribution margin: Below median for more than 20%
• Distribution from Asset Disposal: 16.6% for past 12 months

Trends

• Slight Downtrend: NAV per Unit
• Downtrend: DPU, Property Yield, Interest Coverage Ratio, Distribution on Capital, Distribution Margin

Relative Valuation

• P/NAV - Above +1SD for 1y, 3y & 5y 
• Dividend Yield - Below -1SD for 1y & 5y; Below average for 3y

Author's Opinion

Favorable	Less Favorable
High REIT Sponsor's Shareholding	Low Directors of REIT Manager's Shareholding
High REIT Manager's Shareholding	High Perpetual Securities %
Long WALE	Low Unsecured Debt %
Long Weighted Average Land Lease Expiry	Low Property Yield
Low Cost of Debt	Non-Competitive Management Fees
Long WADM	Low Distribution on Capital
Low Top Geographical Contribution	Low Distribution Margin
Low Top Property & Top 5 Properties Contributions	High Distribution from Asset Disposal
Low Top 10 Tenants Contribution	DPU Downtrend
	Interest Coverage Ratio Downtrend
	Property Yield Downtrend
	Distribution on Capital Downtrend
	Distribution Margin Downtrend

The performance has improved a lot as compared to 2021 as many countries have lifted travel restrictions. From the presentation, management indicated that more corporate and international travel is expected to take place, enabling ART’s properties to raise room rates. With these, the performance for 2H is expected to be better.

You could also refer below for more information:

SREITs Dashboard - Detailed information on individual Singapore REIT

SREITs Data - Overview and Detail of Singapore REIT

REIT Analysis - List of previous REIT analysis posts

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*Disclaimer: Materials in this blog are based on my research and opinion which I don't guarantee accuracy, completeness, and reliability. It should not be taken as financial advice or a statement of fact. I shall not be held liable for errors, omissions and loss or damage due to the use of the material in this blog. Under no circumstances does the information presented on this blog represent a buy, sell, or hold recommendation on any security, please always do your own due diligence before any decision is made.