AscottREIT – UOBKH

1Q08 DPU up 46.5% yoy to 2.33 S cents

Ascott Residence Trust (ART) posted 1Q08 revenue of S$45.6m, 58% higher yoy. This is driven by both acquisitions and strong organic growth. Acquisitions made after 1Q07 contributed S$12.7m revenue and S$7.1m net property income (NPI), 27.8% and 30.3% of total revenue and NPI respectively.

The serviced residences registered strong Revenue Per Available Unit(RevPAU) growth, 15% up from S$123 in 1Q07. As expected, Singapore portfolio enjoyed the strongest organic growth in 1Q08, with RevPAU increasing by 29% yoy to S$251.

Distribution per unit (DPU) increased 46.5% to 2.33 cents. This translates into an annualized DPU yield of 7.5%, compared with 10-year Singapore government bond yield of 2.3%.

We have a BUY rating on ART with target price at S$1.77. We will have a detailed analysis later.