Current location site: Global

Singapore, 28 January 2022 – Ascott Residence Trust (ART) has increased its distribution per Stapled Security (DPS) for FY 2021 by 43% to 4.32 cents compared to FY 2020. ART’s distribution income also grew 46% to S$137.3 million compared to FY 2020. The distribution income for FY 2021 included a one-off distribution of divestment gain of S$45.0 million to share divestment gains with Stapled Securityholders, to replace income loss from divested assets and mitigate the impact of COVID-19. Excluding the divestment gains distributed in FY 2021 and FY 2020, ART’s DPS rose 85% year-on-year due to improved operating performance and ART’s active portfolio management to enhance income stability.

ART’s revenue per available unit (REVPAU^[1]) continued its upward trajectory, rising over six consecutive quarters since 2Q 2020. With the pace of reopening picking up, its REVPAU for 4Q 2021 registered the strongest quarter-on-quarter increase at 24% to S$87. ART’s REVPAU jumped 61% to S$79 for 2H 2021 compared to 2H 2020. Its long-stay properties continued to provide income stability, while the easing of travel restrictions and increased global economic activities led to a hike in demand from both corporate and leisure guests. ART’s key markets, the United States of America (USA), United Kingdom and Australia registered the strongest growth.

Revenue for 2H 2021 increased by 30% to S$209.4 million compared to 2H 2020. This was mainly attributed to higher revenue from its existing portfolio and additional contributions from the acquisition of student accommodation assets in the USA and rental housing properties in Japan in FY 2021. Gross profit for 2H 2021 also grew 49% to S$91.2 million compared to 2H 2020. ART’s stable income sources^[2] contributed about 70% of its gross profit in FY 2021 while the remaining income from management contracts is expected to pick up as demand for accommodation increases with the resumption of travel.

Mr Bob Tan, Chairman of Ascott Residence Trust Management Limited (ARTML) and Ascott Business Trust Management Pte. Ltd. (the Managers of ART) said: “Through our active portfolio management, we have enhanced ART’s income stability by building its longer-stay assets and further diversifying its portfolio. In the past year, ART invested S$780 million in 11 yield-accretive rental housing and student accommodation assets at an average EBITDA yield of about 5%^[3]. We have successfully replaced the distribution income from our divested assets at higher yields. In FY 2020 and 2021, ART divested six assets^[4] at an average exit yield of around 2% and received about S$580 million in proceeds. Our longer-stay assets currently make up about 16% of our total portfolio value. We will raise the asset allocation target in these longer-stay assets from 15-20% in the medium term to 25-30%, further strengthening the resilience of ART’s portfolio. We remain committed to delivering sustainable, long-term value to our Stapled Securityholders.”

Our longer-stay assets currently make up about 16% of our total portfolio value. We will raise the asset allocation target in these longer-stay assets from 15-20% in the medium term to 25-30%, further strengthening the resilience of ART’s portfolio. We remain committed to delivering sustainable, long-term value to our Stapled Securityholders.

Mr Bob Tan, Chairman of Ascott Residence Trust Management Limited (ARTML) and Ascott Business Trust Management Pte. Ltd. (the Managers of ART)

Enhancing the resilience of ART’s portfolio through investments in the longer-stay segment

ART’s entry into the student accommodation segment and increased asset allocation in the longer-stay segment have boosted the resilience of ART’s portfolio. In 2021, ART acquired eight student accommodation assets in the USA and three rental housing properties in Japan. The seven operating student accommodation assets have a robust occupancy rate of close to 100%, while the three rental housing properties have an occupancy rate of over 95%. 

Rejuvenating ART’s portfolio with new developments
Two properties in ART’s portfolio are currently under development. Construction of the student accommodation ‘Standard at Columbia’ started in 3Q 2021 and is expected to complete in 2Q 2023. Jointly invested and developed with ART’s sponsor, The Ascott Limited, the 678-bed asset will serve over 35,000 students from the nearby University of South Carolina.

Construction of the new Somerset serviced residence at the Liang Court site in Singapore also commenced in 3Q 2021 and is slated for completion in 2H 2025. The new 192-unit Somerset serviced residence will be part of an iconic riverfront integrated development. Over 50% of the units are one- and two-bedroom units, catering to expatriates and business executives on long stays.

Strengthening ART’s financial position through disciplined capital and cashflow management
ART has strong financial capacity and healthy liquidity position, giving it the flexibility to invest, pare down debt and/or distribute part of the gains from its divestments to Stapled Securityholders. As at 31 December 2021, ART had a total of approximately S$1.04 billion in cash on-hand and unutilised credit facilities. ART has a debt headroom of S$1.9 billion and a gearing of 37.1%, which is well below the 50% gearing threshold set by the Monetary Authority of Singapore.  

In line with its proactive capital management approach, about 74% of debt are effectively on fixed interest rates as at 31 December 2021, and is expected to raise the amount to 80% to further hedge against rising interest rates. ART’s effective borrowing cost remains low at 1.6% per annum. 

--------

^{[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] Stable income sources include master leases, management contracts with minimum guaranteed income, rental housing and student accommodation properties
[3] For Standard at Columbia, which is under development, the EBITDA yield is a target yield on a stabilised basis
[4] The six divested assets are Ascott Guangzhou, Somerset Azabu East Tokyo, Citadines Didot Montparnasse Paris, Citadines City Centre Grenoble, Somerset Liang Court Singapore (partial gross floor area) and Somerset Xu Hui Shanghai
[5] In the International Monetary Fund’s “World Economic Outlook” (January 2022) report, it forecasts the global economic growth to moderate from 5.9% in 2021 to 4.4% in 2022
[6] “Tourism grows 4% in 2021 but remains far below pre-pandemic levels” (January 2022), World Tourism Organization
[7] Based on inventory available for sale during the first phase of opening}