Ascott Residence Trust (ART) posted results in line with our expectations. FY16 revenue increased 12.9% to S$475.6m, or 98.2% of our full-year forecast, mainly due to the additional contribution of S$75.9m from acquisitions in 2015 and 2016 and partially offset by a S$2.5m decrease in revenue from 3Q15 divestments as well as a S$18.9m decrease from existing properties.

DPU rose 3.5% to 8.27 S cents, or 103.2% of our full-year forecast, boosted by a one-off net realized exchange gain of S$8.8m. Excluding one-off items, ART’s adjusted DPU came up to 7.73 S cents (-4.1% YoY).

FY16 RevPAU climbed 5% to S$140; on a same-store basis, excluding the 2015 and 2016 acquisitions, RevPAU fell 7%. ART’s gearing now stands at 39.8% as at 4Q16, and 82% of total borrowing is maintained on fixed interest rates.

We maintain BUY on ART but place our fair value estimate of S$1.24 under review pending further details from the analyst briefing.

Source: OCBC Research - 24 Jan 2017