Ascott Residence Trust 2H 2021 Results

 

Ascott Residence Trust (SGX.HMN) announces its 2H 2021 results today.

Dividend per security (DPS) increases 14% Year-on-Year to 2.27 cents as compared to 2H 2020 and increases 43% Year-on-Year to 4.32 cents as compared to 2020.

As advanced distribution of 0.545 cents has been made on 9 Nov 2021 for the period 1 Jul 2021 to 19 Sep 2021 due to private placement, a DPS of 1.726 cents for the period 20 Sep 2021 to 31 Dec 2021 will be paid to existing Security holders on 1 Mar 2022.

Distribution per Security for 2021 increases 43% to 4.32 cents and revenue per available unit (REVPAU) increases 17% to $69 from 2020, indicating a recovery in hospitality industry. REVPAU for 4Q 2021 hits $87, registering the strongest quarter-on-quarter increase at 24%. The long-stay properties continued to provide income stability, while the easing of travel restrictions and increased global activities led to a hike in demand from both corporate and leisure guests. Key markets in US, UK and Australia registered the strongest growth.

High revenue (+29.7%) for 2H 2021 compared to 2H 2020 was due to increased revenue from existing portfolio and additional contributions from the acquisition of 6 student accommodation assets in the US and 3 rental housing properties in Japan.

The distribution income for 2021 includes a one-off divestment gain of $45m, termination fee income received upon terminating the sale of Citidines Xinghai Suzhou and Citidines Zhuankou Wuhan, realised exchange gains on the receipt of the divestment proceeds, realised exchange gains from the repayment of foreign currency bank loans with the divestment proceeds.

Gearing ratio is at 37.1% with interest coverage ratio of 3.7 times. Borrowing cost is low at 1.6% per annum. It currently has $340m and $700m of untapped credit facility. 74% of the debts are hedged on  fixed rate, and this ratio is expected to rise to 80% after refinancing of another loan. Hence, interest rates hike have curbed impact on Ascott Residence Trust.

At share price of $1.02 as of time of writing and with dividend per share of $0.0432, Ascott Residence Trust yields more than 4% as it is on track towards recovery of tourism and hospitality sector. NAV per share is $1.19, signifying slight undervalue. 

I believe Ascott Residence Trust is a great long-term recovery play. While waiting with patience for the recovery of the world's tourism industry from the pandemic and reopening of countries' borders in the transition towards an endemic world, shareholders can still be rewarded with at least 4% yield.

Thanks for reading. Stay safe and be strong as always. 

With love & peace, 

Qiongster