Ascendas Hospitality Trust's FY2018/2019 NPI slipped 2.3% to $87.23m

Lower contribution from its Australia hotels hit yearly income.

Ascendas Hospitality Trust (A-HTRUST) ended FY2018/2019 on a dismal note after its net property income (NPI) dipped 2.3% YoY from $87.23m in FY2017/2018 to $85.22m, an announcement revealed. Revenue also fell 6.3% YoY to $190.46m from $203.26m.

Distributable income for the financial year inched up 3.4% YoY to $68.5m from $66.2m, whilst distribution per stapled security (DPS) also rose 2.9% YoY to $0.0603 from $0.0586. This was attributed to full quarter contribution from its five hotels acquired during the year, lower net finance costs, and partial distribution of the proceeds from the divestment of two hotels in Beijing.

In Q4, NPI edged up 4.1% YoY to $22.9m from $22m, whilst revenue slid 1.4% YoY from $49.7m to $49m. Distributable income for the quarter increased 3.5% YoY to $20.1m from $19.5m, whilst DPS grew 2.9% YoY to reach $0.0177 from $0.0172.

The firm attributed the weak yearly performance to lower contribution from its Australia portfolio and unfavourable foreign exchange movement in AUD. However, the absence of earnings from its China portfolio was predominantly recovered through new assets acquired throughout the year.

A decrease in NPI of $1.9m in Australia was attributable to lower contribution of the Australia assets ($1.2m) and unfavourable foreign exchange movement ($700,000).

“Our Sydney hotels continue to face competitive market condition. Although the Sydney hotels managed to maintain a healthy average occupancy rate, the performance was affected by a reduction in room rates,” the firm explained. “Stronger demand for residential conference drove overall performance for Pullman & Mercure Melbourne Albert Park and NPI grew against last year, whilst Pullman & Mercure Brisbane King George Square managed to increase room revenue and NPI through occupancy growth.”

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Park Hotel Clarke Quay in Singapore experienced weaker demand from transient and corporate segments in Q4 FY2018/2019. In addition, there was also the absence of Singapore Airshow, a biennial event, that was held in February 2018, the firm highlighted.

Given the challenges it faced in its key markets, A-HTRUST was able to break into the Seoul market with the acquisition of Splaisir Dongdaemun and Ibis Insadong in May 2018 and December 2018, respectively.

According to CEO Tan Juay Hiang, following the divestment and acquisitions A-HTRUST had undertaken in FY2018/19, 13 of the 14 hotels in the portfolio are freehold properties as at 31 March 2019. “As a result of these acquisitions, portfolio valuation grew by 11.5% YoY to $1.8b as at 31 March 2019,” he revealed.