Ascott REIT profits leapt 12% to $54.62m in Q1

Its properties in Singapore, UK and Philippines drove up earnings.

Ascott Residence Trust (Ascott Reit) began the year on a high note after its profits jumped 12% YoY to $54.62m in Q1 2019 from $48.67m, an announcement revealed. Revenue also edged up 3% YoY from $112.78m to $115.91m.

The increase was attributed to higher revenue and the adoption of FRS 116 Leases with effect from 1 January which introduced a single on-balance sheet lease accounting model for lessees, the firm explained. Excluding FRS 116, profits would have merely inched up 2% YoY to $49.5m.

Higher revenue was also due to stronger performance from Ascott REIT’s properties in Singapore, UK and the Philippines. Singapore and the United Kingdom remained amongst the top contributing markets with gross profit increasing 35% and 20%, respectively due to higher market demand. There was also stronger leisure demand for Ascott Reit’s serviced residences in Tokyo and Melbourne.

Also read: Ascott REIT's 2018 profits rose 5% to $239.36m

“With the higher occupancy at Ascott Makati and higher rates from its renovated apartments, revenue for our Philippines market increased 24%,” Beh Siew Kim, Ascott Residence Trust Management’s (ARTML) CEO, said in a statement. “We expect higher average daily rates for Somerset Grand Citra Jakarta and Element New York Times Square West when their refurbishments are completed in mid-2019.”

Ascott Reit’s diversified portfolio spans 14 countries, with approximately 60% in Asia Pacific, as well as 40% in Europe and the US.

Of its $54.6m earnings, 33% or $17.9m came from properties on Master Leases, $5.7m (10%) from properties on management contracts with minimum guaranteed income and $31m (57%) from properties on management contracts.

Revenue Per Available Unit (RevPAU) rose 3% YoY to $133 in Q1 2019, a year-on-year increase of 3% from Q1 2018.

Unitholders’ distribution also rose 8% YoY to $31.48m in Q1 from $29.16m, whilst distribution per unit (DPU) grew 7% to $0.0145 compared with Q1 2018’s $0.0135. Unitholders’ distribution for the quarter was higher due to better operating performance, lower financing costs and higher one-off realised exchange gain of $1m, Ascott REIT noted.

According to the firm, a realised exchange gain of $2.6m in Q1 2019 also arose from the repayment of foreign currency bank loans with the 15% deposit received for the divestment of Ascott Raffles Place Singapore announced in January 2019. The divestment is expected to be completed in May 2019.

During the quarter, Ascott Reit announced its acquisition of Citadines Connect Sydney Airport, a prime freehold business hotel, for $58.13m (A$60.6m) with an expected yield of over 6%, as part of its disciplined capital recycling approach. This came right after its divestment of Ascott Raffles Place Singapore for $353.3m at an exit yield of about 2%.