Ascott Residence Trust’s (ART) 1Q17 revenue increased 5.4% YoY to S$111.3m, mainly due to additional revenue of S$5.8m from the acquisition of Sheraton Tribeca New York last year which was partially offset by the decline in revenue of S$1.8m from existing properties (mainly Singapore and the UK).

Gross profit fell 2.9% YoY to S$47.2m despite the increase in revenue largely due to the recognition of operating lease expense on a straight-line basis in the United States.

The amount distributable to unitholders’ dropped 8.0% YoY to S$25.1m, while DPU dropped 13.7% YoY from 1.75 S cents in 1Q16 to 1.51 S cents in 1Q17. This makes up 24.7% of our full-year DPU forecast, and we consider the results to be within expectations. Stripping out the net realized exchange gain of S$3.0m, 1Q16 DPU would have been 1.57 S cents.

We are maintaining our HOLD rating on ART, but put our fair value of S$1.105 under review pending more details.

Source: OCBC Research - 21 Apr 2017