Ascott Residence Trust's distributable income down 43% in FY2020

Its Singapore and Vietnam properties gave lower contributions.

Ascott Residence Trust (ART) posted distributable income of $94.2m in FY2020, a 43% decline from the $165.5m it reported for FY2019, the trust announced in a press release.

Revenue for the period totalled $369.9m, or 28% lower than the $514.9m in the previous fiscal year.

Full year distribution per stapled security declined 60% YoY to 3.03 cents from 7.61 cents in 2019.

The trust faced challenges arising from the COVID-19 pandemic, which led to lower revenue contributions from its existing portfolio as well as lower contribution from the Somerset Liang Court Singapore and Somerset West Lake Hanoi in Vietnam.

During the second half of 2020, ART’s distributable income came at $61.7m, 32% lower than the $90.0m in H2 2019. It also reported $161.4m in revenue, a 39% decrease from H2 2019’s $266.6m revenue. DPU for the period is 1.99 cents.

To mitigate the impact of COVID-19, replace income loss from divested assets, and share past divestment gains with stapled securityholders, ART is distributing a one-off partial divestment gain of $40m to stapled securityholders. ART also released the $5m of distributable income which was retained in H1 2020.

“As part of our capital recycling strategy, we have divested two properties at the end of last year with two more to be completed in Q1 2021, all at a premium to their book values,” said Bob Tan, chairman of Ascott Residence Trust Management Limited and Ascott Business Trust Management.

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Proceeds from the sale of these properties will be deployed into higher yielding assets, he added.

Meanwhile, ART’s expansion of their investment mandate to include student accommodation assets and acquisition of our first student accommodation asset “will bolster our resilience and increase our stable income stream,” according to Tan. In particular, Tan said that they will look for opportunities to invest in longer stay lodging assets with longer weighted average lease expiry.