A-HTRUST's Japan and South Korea portfolios drive performance for 2Q FY2019
Japan and South Korea portfolios drive performance as A-HTRUST's NPI grew by 3.5% y-o-y in 2Q FY2019
Hotels acquired in FY2018/19 contributed positively and made up for weaker performance from Australia portfolio as net property income grew by 3.5% y-o-y in 2Q FY2019
Overview of financial results
Net Property Income
Income available for distribution
Income available for distribution (less income retained for working capital)4
-Partial Proceeds from Divestment
Adjusted DPS (cents)5
1. The current financial year end will be a nine-month period from 1 April 2019 to 31 December 2019 following the change of financial year end to 31 December.
2. Save for DPS, percentage changes are based on figures rounded to nearest thousands.
3. Gross revenue and net property income (“NPI”) for the corresponding period last year excluded contribution from the China portfolio, which was divested on 18 May 2018. Including contribution from the China portfolio, gross revenue and NPI for 6M FY2018/19 were S$94.6 million and S$40.7 million, respectively.
4. Retention of income for 2Q FY2019 and 6M FY2019 were based on 7.3% and 7.0%, of distributable income respectively, while retention of income for 2Q FY2018/19 and 6M FY2018/19 were based on 7.0% of distributable income respectively.
5. Excluding the partial distribution of the proceeds from the divestment of Novotel Beijing Sanyuan and ibis Beijing Sanyuan (“Partial Proceeds from Divestment”).
Singapore, 29 October 2019 – Net property income of Ascendas Hospitality Trust for the second quarter ended 30 September 2019 (“2Q FY2019”) increased by 3.5% year-on-year (“y-o-y”) mainly due to the contribution from the three WBF-branded hotels in Japan and ibis Ambassador Seoul Insadong that were acquired between September 2018 and December 2018. The increase was partially offset by the weaker performance of the Australia portfolio, and further exacerbated by weaker Australian Dollar (“AUD”) and Korean Won (“KRW”) against Singapore Dollar (“SGD”).
While distribution per stapled security (“DPS”) of 1.38 cents for 2Q FY2019 was lower y-o-y, this was mainly due to the absence of partial distribution of the Partial Proceeds from Divestment of S$1.7 million made in the corresponding quarter last year.
On 13 September 2019, it was announced that the acquisition of the serviced apartments in Melbourne was terminated as a result of certain issues relating to the specifications and the condition of the property. Following the announcement, the hotel management agreement in respect of this property has also been terminated.
Portfolio of hotels under management agreements
Avg Occupancy Rate (%)
Avg Daily Rate (“ADR”)(AUD)
Revenue per Available Room (“RevPAR”)(AUD)
Despite the challenges in the Sydney market, Pullman Sydney Hyde Park posted better y-o-y results for the quarter as a result of stronger conference and events (“C&E”) business, while ongoing renovation at Novotel Sydney Parramatta impacted the earnings of the hotel. The hotel in Melbourne experienced improved C&E business during the quarter, but overall performance was affected by the new supply in the city. The performance of Pullman and Mercure Brisbane King George Square continued to improve, and its earnings were further lifted by higher contribution from food and beverage (“F&B”) business as a result of the recently repositioned F&B space.
Portfolio of hotels under master leases
The NPI of the Japan portfolio grew by 15.3% y-o-y in 2Q FY2019 mainly due to the contribution from the three WBF-branded hotels that were acquired between September and December last year. Sotetsu Grand Fresa Osaka-Namba was mainly affected by the reduced number of South Korean tourists visiting Osaka. During the quarter, Hotel Sunroute Ariake was rebranded as Sotetsu Grand Fresa Tokyo-Bay Ariake as the operator seeks to differentiate the hotel, and there was no change to the terms of the master lease.
The performance of the South Korea portfolio for the quarter also improved y-o-y due to the contribution from ibis Ambassador Seoul Insadong which was acquired in December 2018. While the underlying performance of the Park Hotel Clarke Quay was affected by weaker transient demand during the quarter, the master lease arrangement for the hotel mitigated the impact to A-HTRUST.
Mr Tan Juay Hiang, Chief Executive Officer of the Managers, said: “We are pleased that the five hotels that were acquired last year continued to have a positive impact on the portfolio. The contribution from these hotels have made up for the weaker performance of the Australia portfolio, resulting in net property income growth of 3.5% y-o-y for 2Q FY2019. The addition of the five hotels have improved income stability and further diversified the portfolio, strengthening its resilience. Amidst the slowing global economy, we are positive that the portfolio can remain resilient to mitigate adverse impact.”
Overall gearing ratio remained prudent at 33.8% as at 30 September 2019. Average interest rate for the quarter remained relatively low at 1.8%, with more than 80% of the borrowings on fixed rates. The weighted average debt maturity as at 30 September 2019 is 3.3 years.
The demand for hotel accommodation in Australia is expected to grow as both international arrivals and domestic overnight trips continued to improve for the year ended 30 June 20191. However, the hotel market conditions in Sydney and Melbourne are expected to remain competitive in the near term due to increase in supply of hotel rooms. The hotel market in Brisbane is expected to continue its recovery, further buoyed by upcoming attractions in the city over the next few years, including the on-going development of an integrated resort in Queen’s Wharf and the proposed ‘Brisbane Live’ entertainment precinct.
The Tokyo hotel market is expected to benefit from major international events held in the city such as the 2020 Tokyo Olympics. The hotel market in Osaka is expected to experience weaker market conditions due to a decrease in South Korean visitors against the backdrop of ongoing tension between the two countries, compounded by increase in supply of hotel rooms. However, the new attraction at Universal Studios Japan and hosting of the 2025 World Expo will provide a boost for the Osaka hotel market in the medium term. The proposed development of two integrated resorts in Japan will also benefit the tourism sector of the country in the longer term.
International arrivals into South Korea continued to be robust with a y-o-y growth of 16.1% to 12.9 million visitors year-to-date (“YTD”) September 20192. Its top three source markets posted strong growth, with the number of Chinese visitors increasing by 27.1% y-o-y for the period YTD September 20192. With upcoming supply of hotel rooms expected to be relatively moderate, the general performance hotel market is expected to improve as inbound arrivals continue to grow.
The growth trend in international arrivals continued as Singapore welcomed 12.9 million international visitors during the first eight months of 2019, an increase of 1.9% y-o-y3, and the new developments such as expansion of the two integrated resorts are expected to continue driving inbound over the longer term. Singapore was also recently ranked as world’s most competitive economy, reinforcing its position as a key global economic centre which is expected to drive corporate demand. As inbound arrivals continue to grow, this will support the hotel market amidst the expected modest increase in supply.
The abovementioned dates are indicative and may be subject to change. Please refer to future announcement(s) for the exact dates of these events and further details of the Combination.
In connection with the Combination, the Managers will continue to engage the various lenders of the existing borrowings of A-HTRUST to discuss provisions in the various loan documents that may be triggered as a result of the completion of the Combination.
“The proposed combination received a resounding approval at the meetings held on 21 October 2019 and we would like to thank the stapled securityholders who have turned up to vote in person or by proxy. On behalf of the Boards of the Managers, we would also like to express our sincere appreciation to all the stapled securityholders for your support and confidence over the past seven years as A-HTRUST moves on to a new chapter. We hope you can continue to support the combined entity which has a larger and more diversified portfolio, with greater capacity to drive further growth.”