Ascott Residence Trust’s (ART) 1Q18 results were slightly weaker than expectations. Revenue increased by S$1.5m or 1.4% YoY to S$112.8m, or 21.3% of our full-year forecast.

This was mainly due to S$8.3m of additional revenue from last year’s acquisitions, offset by a S$4.0m decrease in revenue from divestments and another S$2.8m from existing properties.

Distributable income increased 16.1% to S$29.2m, a figure which includes a one-off realized exchange gain of S$1.6m. DPU dropped 10.6% to 1.35 S cents, or 19.3% of our full-year forecast.

1Q contribution to full-year DPU was ~21% in both FY16 and FY17, with 1Q being seasonally weaker quarter because of lower gross profit from the US assets.

The Group RevPAU increased 1% YoY to S$129 while Singapore RevPAU dropped 7% YoY to S$165. We maintain our HOLD rating but place our fair value of S$1.16 under review.

Source: OCBC Research - 18 Apr 2018