Ascott Residence Trust H2 2020 DPU fell 52% YoY

Analysts are positive with ART’s growth prospects.

Ascott Residence Trust (ART) has reported a distribution per unit (DPU) of 1.99 cents for H2 2020, falling 52% YoY from the previous year, which brings the FY2020 DPU to 3.03 cents, down 60.6% YoY than in FY2019.

Revenue for 2H 2020 decreased by 39% YoY to $161.4m, which is mainly attributed to the lower revenue from the existing portfolio due to the impact of COVID19, and a decrease in contributions from the divestment of Somerset Liang Court Singapore and Somerset West Lake Hanoi in Vietnam.

Distributable income for the same period dropped by 32% YoY to $61.7m, pushing its distributable income for FY2020 to $94.2m.

Analysts are positive with ART’s growth prospects amidst the trust’s latest results and outlook.

OCBC Investment Research analyst Chu Peng gave a “buy” recommendation for ART, with an increase in fair value estimate at $1.24.

Chu mentioned that ART will expand its investment strategy to include the acquisition of student accommodation properties, which will cost approximately $130.2m and will be financed through a mix of debt and divestment proceeds.

The acquisition is expected to be DPU accretive with pro-forma FY20 DPU increasing by 4.4%.

“We see the acquisition as a positive as it will pave the way to enhance ART’s long-term resilience and diversification,” Chu said.

Maybank Kim Eng analyst Chua Su Tye also gave ART a “buy” recommendation, with the 12-month target price at $1.25%.

“With progress on vaccine rollouts uneven, revenue per available unit recovery in FY21 will be slow. We continue to like ART for its diversified portfolio, concentrated long-stay assets, strong balance sheet, and $200m in residual divestment gains which may lift capital distributions amidst slower DPU growth,” Chua said.

ART managers said the trust’s properties have helped cushion the impact of COVID-19 on its financial performance.

“Given the resurgence and uncertainty around new strains of the coronavirus, global economic recovery remains fragile. Nonetheless, ART is well-capitalised and continues to build on our financial strength,” chairman Bob Tan said.

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