Ascott Residence Trust achieves strong recovery with highest growth in quarterly revenue per available unit of 85% in 2Q 2022
Increases distribution per Stapled Security by 14% year-on-year to 2.33 cents in 1H 2022
Ascott Residence Trust (ART) has achieved strong recovery with the highest quarterly increase in revenue per available unit (REVPAU1) of 85% in 2Q 2022 since 2Q 2020. ART’s REVPAU jumped 91% to S$124 in 2Q 2022 compared to 2Q 2021. Its robust operating performance was due to higher average daily rate and average occupancy rate which grew from about 50% in 1Q 2022 to about 70% in 2Q 2022. ART’s properties in United States of America (USA), United Kingdom, Singapore and Australia registered the strongest quarter-on quarter growth in REVPAU. In 1H 2022, REVPAU rose 60% to S$96 compared to the previous year.
ART has increased its distribution per Stapled Security (DPS) for 1H 2022 by 14% to 2.33 cents compared to 1H 2021. ART’s total distribution also grew 20% to S$76.7 million compared to 1H 2021. The total distribution for 1H 2022 included realised exchange gain arising from repayment of foreign currency bank loans. Excluding one-off items2, ART’s adjusted DPS rose 120% year on-year to 1.78 cents on stronger operating performance.
Revenue for 1H 2022 increased by 45% to S$267.4 million compared to 1H 2021. This was mainly attributed to higher revenue from ART’s existing portfolio, contributions from its expanded portfolio of longer-stay assets comprising student accommodation and rental housing properties, as well as from the newly opened lyf one-north Singapore. Gross profit for 1H 2022 also grew 44% to S$118.2 million compared to 1H 2021. On a same store basis3, revenue and gross profit in 1H 2022 increased by 32% and 28% respectively compared to 1H 2021.
Mr Bob Tan, Chairman of Ascott Residence Trust Management Limited (ARTML) and Ascott Business Trust Management Pte. Ltd. (the Managers of ART) said: “As the global travel recovery continues, our serviced residences and hotels have contributed more growth income. This builds upon the steady income stream from our strong foundation of longer-stay assets. ART’s diversified and resilient portfolio remains poised for further growth. In addition, our robust financial position gives us the capacity to achieve our asset allocation target of 25-30% in longer-stay assets and 70- 75% of our portfolio in serviced residences and hotels.”
Ms Serena Teo, Chief Executive Officer of ARTML and Ascott Business Trust Management Pte. Ltd. (the Managers of ART) said: “As Asia Pacific’s largest hospitality trust, ART is a key barometer of the sector’s performance. Our quality hospitality properties remain highly sought after by corporate and leisure guests, and the pent-up demand has enabled ART to achieve our highest increase in REVPAU over the last quarter. We are seeing strong forward bookings at our properties and we expect this demand to sustain. With our geographically diverse network of serviced residences and hotels in key gateway cities and large domestic markets, ART has the agility to price our room rates dynamically to abate rising utility and labour costs, and better capture growth opportunities. As our properties cater mainly to long-stay guests, we have lower manning requirements and leaner cost structures. ART’s stable income base is expected to cushion the impact from recessionary concerns, rising inflation and macroeconomic uncertainties.”
Enhancing the resilience of ART’s portfolio through the longer-stay segment ART’s stable income sources4 contributed 68% of its gross profit in 1H 2022 while the remaining 32% were income from management contracts from serviced residences and hotels.
ART’s seven operating student accommodation properties in the USA and three rental housing properties in Japan acquired over the last year have strong average occupancy rate of over 95%. For the student accommodation properties in USA, favourable pre-leasing for the next academic year have been observed with three of the properties being fully leased. The average pre-leasing rate of the student accommodation properties is about 95%; with an expected rent growth of about 8% year-on-year.
In March 2022, ART completed the acquisition of its first student accommodation property in Japan, Eslead College Gate Kindaimae. When the acquisition of four rental housing properties is completed between 4Q 2022 and 2Q 2023, they are expected to further add to the stable income streams of ART. The acquisition will increase ART’s longer-stay properties to 17% of its total portfolio value, keeping ART on track to achieve its medium-term asset allocation target of 25- 30%.
Rejuvenating ART’s portfolio with new developments
Two properties in ART’s portfolio are currently under development. The student accommodation Standard at Columbia in the USA has topped out in 2Q 2022 and is expected to complete in 2Q 2023. Construction of the new Somerset serviced residence at the Liang Court site in Singapore remains on track for completion in 2H 2025.
ART’s leadership in sustainability
ART consolidated its reputation as a leader in sustainability. In April 2022, ART was the first hospitality trust in the world to launch a S$200 million sustainability-linked bond. Building on its recognition as the 2021 ‘Global Sector Leader - Hotel’ in GRESB, ART has greened 35% of its global portfolio by square metre and aims to green 50% of its global portfolio by 2025 and 100% of its global portfolio by 2030.
Strengthening ART’s financial position through disciplined capital and cashflow management
ART has strong financial capacity and healthy liquidity position. As at 30 June 2022, ART had a total of approximately S$1.12 billion in cash on-hand and available credit facilities. ART has a debt headroom of S$1.8 billion and a gearing of 37.5%, which is well below the 50% gearing threshold set by the Monetary Authority of Singapore.
To mitigate the impact of rising interest rates, about 79% of debt are effectively on fixed interest rates as at 30 June 2022. The weighted average debt to maturity is about three years. Furthermore, ART’s debt is denominated in various foreign currencies, with interest rates rising at different degrees across the countries. ART’s effective borrowing cost remains low at 1.7% per annum.
Summary of Results
- Total distribution for 1H 2022 included realised exchange gain arising from repayment of foreign currency bank loans.
- Total distribution for 1H 2021 included:
- one-off distribution of divestment gain of S$20.0 million to share divestment gains with Stapled Securityholders, replace income loss from divested assets and mitigate the impact of COVID-19 on distributions;
- termination fee income received upon termination of the sale of Citadines Xinghai Suzhou and Citadines Zhuankou Wuhan;
- realised exchange gain on the receipt of the divestment proceeds; and
- realised exchange gain arising from the repayment of foreign currency bank loans with the divestment proceeds.
Distribution and Book Closure Date
ART’s distributions, made on a semi-annual basis, are as follows:
For ART’s 1H 2022 financial statement and presentation, please visit www.ascottresidencetrust.com
1 Portfolio REVPAU refers to the revenue per available unit of properties under management contracts and management contracts with minimum guaranteed income. It excludes master leases, rental housing and student accommodation properties
2 Excluding one-off items comprising (1) distribution top up of S$20 million in 1H 2021, (2) realised exchange gain on repayment of foreign currency bank loans in 1H 2021 and 1H 2022, (3) realised exchange gain on the receipt of the divestment proceeds in 1H 2021 and (4) termination fee income in 1H 2021
3 Excluding acquisitions and divestments
4 Stable income sources include master leases, management contracts with minimum guaranteed income, rental housing and student accommodation properties
About The Ascott Limited
Since pioneering Asia Pacific's first international-class serviced residence with the opening of The Ascott Singapore in 1984, Ascott has grown to be a trusted hospitality company with more than 940 properties globally. Headquartered in Singapore, Ascott's presence extends across more than 220 cities in over 40 countries in Asia Pacific, Central Asia, Europe, the Middle East, Africa, and the USA.
Ascott's diversified accommodation offerings span serviced residences, co-living properties, hotels and independent senior living apartments, as well as student accommodation and rental housing. Its award-winning hospitality brands include Ascott, Citadines, lyf, Oakwood, Quest, Somerset, The Crest Collection, The Unlimited Collection, Preference, Fox, Harris, POP!, Vertu and Yello; and it has a brand partnership with Domitys. Through Ascott Star Rewards (ASR), Ascott's loyalty programme, members enjoy exclusive privileges and offers at participating properties.
A wholly owned business unit of CapitaLand Investment Limited, Ascott is a leading vertically-integrated lodging operator. Harnessing its extensive network of third-party owners and in-market expertise, Ascott grows fee-related earnings through its hospitality management and investment management capabilities. Ascott also expands its funds under management by growing its sponsored CapitaLand Ascott Trust and private funds.
For more information on Ascott's industry record of 40 years and its sustainability programme, please visit www.discoverasr.com/the-ascott-limited. Connect with us on Facebook, Instagram, TikTok and LinkedIn.
About CapitaLand Investment Limited
Headquartered and listed in Singapore, CapitaLand Investment Limited (CLI) is a leading global real estate investment manager (REIM) with a strong Asia foothold. As at 30 September 2023, CLI had S$133 billion of real estate assets under management, and S$90 billion of real estate funds under management (FUM) held via six listed real estate investment trusts and business trusts, and more than 30 private vehicles across Asia Pacific, Europe and USA. Its diversified real estate asset classes cover retail, office, lodging, business parks, industrial, logistics and data centres.
CLI aims to scale its FUM and fee-related earnings through fund management, lodging management and its full stack of operating capabilities, and maintain effective capital management. As the investment management arm of CapitaLand Group, CLI has access to the development capabilities of and pipeline investment opportunities from CapitaLand's development arm.
As a responsible company, CLI places sustainability at the core of what it does and has committed to achieve Net Zero carbon emissions for scope 1 and 2 by 2050. CLI contributes to the environmental and social well-being of the communities where it operates, as it delivers long-term economic value to its stakeholders.
Visit http://www.capitalandinvest.com/ for more information.
Joan Tan
Assistant Vice President, Corporate Communications
+65 6713 2864
The Ascott Limited
