Ascott Residence Trust

Ascott Residence Trust: 3Q13 DPU grew 6% y/y to 2.37cts, above consensus of 2.24cts, and translates to an annualized yield of 7.4%. Revenue increased 11% q/q to $86.1m, primarily due to contributions from 17 new properties acquired in 2H12 and Jun ’13. The new properties are located in China, Germany, Japan and Singapore. Revenue per available unit (RevPAU) however dipped 10% to $133/day, following the divestment of Somerset Grand Cairnhill Singapore, which had a relatively higher average daily rate and weaker performance from Philippines and Japan (due to yen depreciation). Management expects FY13 to remain profitable. The group will continue to invest in asset enhancement initiatives in 2013 and 2014 to drive organic growth. During the quarter, Ascott Reit completed the first phase of refurbishment for both Citadines Toison d’Or Brussels and Somerset Xu Hui Shanghai in 3Q13, lifting average daily rates by 20% and 35% respectively for the renovated apts. Meanwhile, the renovation of five other properties is on track, being Ascott Jakarta, Ascott Makati, Somerset St Georges Terrace Perth, Citadines Toison d’Or Brussels and Citadines Ramblas Barcelona. As at end Sep, the group’s gearing was 41.1%. Average cost of debt was 3.2%, with an interest cover of 4.2x. 69% of borrowings are on fixed interest rates. NAV at $1.38 implies 0.93x P/B, based on last closing price of $1.285.