Ascott Residence Trust - Results above expectations

Tuesday, July 28, 2009

Ascott Residence Trust reported distributable income of S$21.9mn (-10.3% yoy) and DPU of 1.79 cents (-18.3% yoy) for 2Q09 on back of improved sentiments and cost management initiatives, well above our expectations. Total DPU for 1H09 is 3.55 cents and will be paid on 28 Aug 09. The overall portfolio occupancy levels for 2Q09 were in the 70's down 10% compared to the same period last year.

RevPAU from their units in Australia (+11% in AUD terms) and Philippines (+7.5% in peso terms) were significantly up during 2Q09. RevPAU from China (-19%) were down by due to the visa restrictions for 60th anniversary celebrations in Beijing and Shanghai. Tianjin(+1.6%) performed relatively better in RMB terms.

RevPAU remained lower at Singapore(-39%),Japan(-10%) due to weak demand from business travelers. However the management expects the demand to pick up during the 2H09.

The company's portfolio tenant mix remains well diversified with average length of stay of about 7 months slightly lower when compared to the previous quarter as some of the tenants shifted towards <1 month stay. The gearing remained at 0.4x with 62% of their debts maturing at 2011.The effective borrowing for 2Q09 were at 3.4% slightly lower than the 3.5% for the first quarter.

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