ART – BT

One-off events pull down Ascott Trust DPU

Q4 payout is 1.83 cents; full-year payout up 13 per cent to 8.53 cents

DISTRIBUTION per unit for the fourth quarter at Ascott Residence Trust has fallen 15 per cent from a year ago and is 8 per cent below the trust manager’s forecast, due to costs incurred for one-off events in the quarter.

For the current year, ‘we expect operating performance of our properties to improve over 2011 based on source currency’, said Ascott Residence Trust Management Ltd CEO Chong Kee Hiong. However, this is likely to be offset by an estimated 50 basis point increase in interest expense in 2012.

What will be critical to the trust’s bottom line this year will be movements between the Singapore dollar and three currencies – the Vietnamese dong, the euro and the pound. Income received in these currencies account for about 60 per cent of ART’s gross profit on an annual basis.

When asked about the likelihood of ART making acquisitions, Mr Chong said that generally, buyers and sellers are likely to adopt a wait-and-see attitude in the first half due to market uncertainty. ‘Deals are more likely in the second half.’

DPU for the three months ended Dec 31, 2011 fell 15 per cent year on year to 1.83 cents. The latest quarter’s DPU was also 8 per cent lower than the 1.99 cents that ARTML had forecast in an offer information statement dated Sept 13, 2010.

This is due to costs incurred for one-off events in Q4 2011, including a $2.1 million provision for licensing-related matters for a service residence in China, about $500,000 for setting up a US$2 billion euro-medium term note programme to tap an enlarged pool of investors, and loan-related expenses and cash holding costs of $800,000 in conjunction with raising $250 million from the trust’s existing medium term note programme to refinance secured borrowings due in 2012, extend loan tenure and free up encumbered assets for greater financial flexibility.

‘This has resulted in a stronger balance sheet with reduced debt refinancing exposure in 2012, and a healthy debt maturity of more than three years with close to four times interest cover,’ said Mr Chong.

Excluding the above one-off cost items, the Q4 2011 unitholders’ distribution would have been $24 million (matching Q4 2010’s $23.9 million), instead of $20.6 million. ARTML’s forecast for Q4 2011 was $22.5 million.

The trust, which makes semi-annual payouts, will distribute 4.063 cents per unit for the July 1-Dec 31 2011 period. In the stock market yesterday, the counter closed unchanged at $1.005.

ART’s full-year 2011 DPU payout of 8.53 cents, which is up 13 per cent from 2010, represents 100 per cent of distributable income. The FY2011 DPU is 10 per cent above forecast.

Revenue for Q4 2011 rose 3 per cent year on year to $75.3 million. Revenue per available unit per day too improved 7 per cent to $146 – largely on the back of stronger performance from the group’s service residences in the UK, Singapore and Indonesia. The two figures also exceeded forecast by 2 per cent and 6 per cent respectively.

Full-year revenue rose 39 per cent to $288.7 million, while gross profit surged 55 per cent to $157.5 million. This was due largely to additional contribution from the 28 service residences acquired on Oct 1, 2010, partly offset by divestment of Ascott Beijing and Country Woods in Jakarta. On a same store basis, FY2011 revenue increased by 1.8 per cent to $165.3 million, and gross profit climbed 4 per cent to $81.1 million, led by Singapore service residences.

Unitholders’ distribution climbed 67 per cent to $96.2 million for FY2011.

ART has 65 properties with 6,600 units in 23 cities across 12 countries in the Asia-Pacific and Europe.

‘We will continue to implement asset enhancement initiatives to increase the returns of our portfolio. Operating performance of London properties is expected to be boosted by the completion of the renovation of Citadines Prestige Trafalgar Square and the upcoming London Olympics 2012,’ ARTML said in its results statement.