Ascott Residence Trust's 4Q 2019 distribution per stapled security rises 6% to 2.27 cents
Ascott Residence Trust's 4Q 2019 distribution per stapled security rises 6% to 2.27 cents
ART cements position as proxy hospitality trust in Asia Pacific and continues its proactive portfolio management with acquisition of a Quest freehold serviced residence in Sydney
Singapore, 30 January 2020 – Ascott Residence Trust’s (ART) distribution per stapled security (DPS) for 4Q 2019 rose 6% to 2.27 cents compared with 4Q 2018. Unitholders’ distribution for 4Q 2019 increased 6% year-on-year to S$49.3 million. Gross profit went up by 3% to S$65.3 million due to the adoption of accounting standard FRS 116 Leases1with effect from 1 January 2019. In 4Q 2019, gross profit2 for the Philippines, Belgium and Singapore increased by 42%, 38% and 20% respectively due to stronger demand. Gross profit2 for Vietnam also grew 7% because of higher corporate demand.
Singapore, 21 November 2019 – Ascott Residence Trust (Ascott Reit) will join City Developments Limited (CDL) and CapitaLand Limited (CapitaLand) to redevelop the Liang Court site11 into an integrated development2. Ascott Reit has signed a put and call option agreement with CDL to divest 15,170 square metres (sq m) of the site’s gross floor area (GFA) for Somerset Liang Court Singapore for S$163.3 million3. With net proceeds from the divestment, Ascott Reit will redevelop the retained GFA of 13,034 sq m into a new Somerset serviced residence with a hotel licence. The land’s lease tenure will be refreshed from 57 years to 99 years. Upon completion, the estimated project development expenditure of the new property is approximately S$300 million4.
While ART’s revenue for 4Q 2019 decreased following the divestment of Ascott Raffles Place Singapore and Somerset West Lake Hanoi, its revenue for the year ended 31 December 2019 increased year-on-year. The increase was largely due to higher revenue from the existing properties and additional contribution from the acquisition of Citadines Connect Sydney Airport in May 2019.
ART maintains a balanced and diversified portfolio that provides stable and growth income. About 38% of the gross profit for 4Q 2019 was contributed by stable income from properties on master leases and properties on management contracts with minimum guaranteed income, while the remaining 62% was from properties on management contracts.
“The successful combination of ART and Ascendas Hospitality Trust at the end of 2019 has cemented ART’s position as the proxy hospitality trust in Asia Pacific with a total asset value of S$7.4 billion3. ART’s DPS is higher in the fourth quarter, as we continue to proactively enhance and reconstitute our portfolio. With an enlarged debt headroom of S$1.5 billion, we have greater capacity for more acquisitions, development or conversion projects. For two years, we have achieved over 75% of EBITDA4 contribution from developed markets. ART is well-positioned for inclusion into the FTSE EPRA Nareit Developed Index5. This will lead to higher trading liquidity and visibility to institutional investors, as well as a potential positive re-rating.”
- Mr Bob Tan, Chairman of Ascott Residence Trust Management Limited and Ascott Business Trust Management Pte. Ltd. (the Managers)
“As part of our active portfolio management, ART has entered into an agreement to acquire a prime freehold serviced residence in Australia for A$46.0 million. The acquisition of Quest Macquarie Park Sydney is in line with ART’s strategy to enhance returns for our stapled securityholders while strengthening investments in developed markets and maintaining a predominantly Asia Pacific-centric portfolio. The Quest serviced residence, which is well-located in Sydney’s second largest business district of Macquarie Park, will be under a master lease agreement and will add to our stream of stable income when the transaction completes by 1Q 2020. The annual rent under the master lease agreement provides an EBITDA yield of mid 5% and is also indexed at a 4% increase each year, subject to periodic market review.”
- Ms Beh Siew Kim, the Chief Executive Officer of the Managers of ART
Ms Beh added: “Through proactive portfolio reconstitution, we have unlocked over S$100 million in total net gains in 4Q 2019. Our recent divestment of the partial gross floor area of Somerset Liang Court Singapore for S$163.3 million at 44% above book value is slated for completion in April 2020. We will begin to develop the property in the second quarter. We have also divested Somerset West Lake Hanoi in October 2019 at a value of S$18.5 million, which was 39% above book value. The divestment of Citadines Xinghai Suzhou and Citadines Zhuankou Wuhan, at over 30% above their combined book values, is also expected to complete in 1H 2020. lyf one-north Singapore is also slated to complete construction by end 2020 and open in 2021. We will continue to seek accretive investments in gateway cities while actively identifying opportunities to unlock the value of assets and redeploy the capital to higher-yielding properties.”
On the Novel Coronavirus situation, Ms Beh said: “The well-being of our guests and employees is our top priority. We are actively monitoring the development of the Novel Coronavirus situation and have taken the necessary precautionary measures at our properties in accordance with guidelines from the health authorities. These include conducting temperature checks at our properties and intensifying cleaning and disinfecting of our properties. Our properties are proactively extending assistance to guests whose travel plans have been disrupted. We have advised guests and employees to observe good personal hygiene and monitor their health closely. We will continue to monitor the situation closely and take more precautionary measures where necessary.”
“The extent of the impact from the Novel Coronavirus situation is uncertain as it is still evolving. Our geographically diversified portfolio with no concentration of earnings from any single market6, as well as mix of stable and growth income streams, are expected to mitigate the impact. Post-combination with A-HTRUST, ART’s proportion of stable income is also expected to increase with the addition of more properties on master leases.”
ART has 86% of its total borrowings on fixed interest rates to hedge against potential rising interest rates. Effective borrowing cost7 remained low at 2.0% per annum. Its gearing of 33.6%8 as at 31 December 2019 was well below the 45% gearing threshold set by the Monetary Authority of Singapore.
Summary of Results
YTD Dec 2019
YTD Dec 2018
Revenue (S$ million)
Gross Profit (S$ million) (a)
Unitholders’ Distribution (S$ million) (b) (c)
Distribution Per Stapled Security (DPS) (cents)
DPS (cents)(adjusted for one-off items) (d)
Revenue Per Available Unit (RevPAU) S$/day
(a) FRS 116 Leases is effective from 1 January 2019. The adoption of this standard changes the nature of expense for the Group’s portfolio of operating leases and replaced the straight-line operating lease expense to change in fair value for right-of-use assets and interest expense on lease liabilities. Please see section 5 of the financial statement for more details. Gross profit (excluding FRS 116 impact) for 4Q 2019 and YTD Dec 2019 is S$60.1 million and S$232.0 million respectively.
(b) Unitholders’ distribution for 4Q 2019 included a one-off partial distribution of divestment gain of S$13.5 million to replace lost income and share divestment gains with stapled securityholders. Unitholders’ distribution for 4Q 2018 included a one-off partial distribution of divestment gain of S$6.5 million.
(c) Unitholders’ distribution for YTD Dec 2019 included a realised exchange gain of S$5.7 million arising from the repayment of foreign currency bank loans with the divestment proceeds from Ascott Raffles Place Singapore, and the partial distribution of divestment gain of S$17.5 million.
Unitholders’ distribution for YTD Dec 2018 included a realised exchange gain of S$1.6 million arising from the receipt of divestment proceeds and repayment of foreign currency bank loans with the divestment proceeds, and the partial distribution of divestment gain of S$6.5 million.
(d) DPS for 4Q 2019 was adjusted to exclude the divestment gain (as mentioned above) and DPS for 4Q 2018 was adjusted to exclude the divestment gain (as mentioned above) and contribution from Ascott Raffles Place Singapore.
For YTD Dec 2019 and YTD Dec 2018, the DPS was adjusted to exclude the divestment gain, realised exchange gain and contribution from Ascott Raffles Place Singapore.
Distribution and Book Closure Date
ART’s distributions, made on a semi-annual basis, are as follows:
For 1 January 2019 to 30 June 2019
For 1 July 2019 to 31 December 2019
3.431 cents per Unit
4.180 cents per Unit
Book Closure Date
7 August 2019
30 December 2019
29 August 2019
10 February 2020
For ART’s FY 2019 financial statement and presentation, please visit www.ascottresidencetrust.com.
For more information on Quest Macquarie Park Sydney, please refer to the Annex.
 The adoption of the accounting standard FRS 116 Leases has changed the nature of expenses for ART’s portfolio of operating leases and replaced the straight-line operating lease expense to change in fair value for right-of-use assets and interest expense on lease liabilities.
 Gross profit based on local currencies.
 As at 31 December 2019.
 EBITDA refers to earnings before interest, taxes, depreciation and amortisation.
 FTSE EPRA Nareit Developed Index tracks the performance of listed real estate companies and REITs worldwide.
 ART owns seven properties in China, including one in Wuhan – Citadines Zhuankou Wuhan which contributes less than 1% to ART’s total gross profit in 4Q 2019. Following the divestment of Citadines Xinghai Suzhou and Citadines Zhuankou Wuhan, which is expected to complete in 1H 2020, ART’s portfolio in China will be reduced to five properties, which will contribute less than 5% of its total gross profit.
 Excluding the effect of FRS 116 Leases which was effective 1 January 2019.
 Computation of gearing excludes lease liabilities recognised by virtue of FRS 116 as these operating leases were entered into the ordinary course of business and were in effect before 1 January 2019.
Strategically located within the Macquarie Park Business Centre with about 860,000 sqm of commercial net lettable area, Quest Macquarie Park Sydneyis surrounded by a range of corporations in industries such as telecommunications, technology, pharmaceutical and electronics. It is near the Macquarie Park Train Station, which is part of the Sydney Metro North West Line connecting Macquarie Park to Sydney Central Business District. It is also a five-minute drive to Macquarie University, Macquarie University Hospital and Macquarie Centre, with easy access to key commercial centres. The operating 111-unit property offers facilities such as a gymnasium and conference facilities. It has a variety of studio, one-bedroom and two-bedroom apartments with a kitchen, ideal for guests on long stay.