Ascott Residence Trust (ART) reported its 4Q15 results which came in within our expectations. Revenue grew 25.5% YoY to S$119.2m, driven largely by additional contribution from acquisitions made in 3Q15 and 4Q14, coupled with a slightly better operating performance from existing properties. However, DPU decreased by 4.2% to 2.07 S cents.

If we adjust for one-off items in 4Q14, ART’s adjusted DPU would instead have increased by 17.6% YoY. For FY15, revenue rose 17.9% to S$421.1m, while DPU fell 2.6% to 7.99 S cents. Both figures formed 99.1% of our full-year forecast. Encouragingly, ART’s portfolio RevPAU jumped 17% YoY to S$145 due partly to the recent acquisitions made.

Excluding the acquisitions, its RevPAU still increased 2% YoY as a result of stronger performance of its assets in China, Indonesia and Vietnam. Maintain our BUY rating but we will be reviewing our S$1.44 fair value estimate.

Source: OCBC Research - 26 Jan 2016