Ascott Residence Trust’s (ART) 3Q20 portfolio RevPAU fell 70% YoY to S$47 but improved 27% QoQ, on the back of easing travel restrictions, reopening of temporarily closed properties, recovery in domestic travel in some markets and block bookings from government.

3Q RevPAU fell 91%, 50%, 63%, 78% and 30% YoY respectively for ART’s key markets i.e. Japan, Singapore, Australia, US and China. Overall, countries catering to long-stay travellers continued to be more resilient than those catering to transient travellers. Portfolio occupancy improved from 30% in 2Q to 40% in 3Q.

While the outlook remains uncertainty with the resurgence of Covid-19 cases in Europe/UK, we believe that ART’s focus on corporate, long-stay serviced residences could provide a buffer to the fall in occupancy and room revenue.

Factoring in the risks of non-renewal of the master leases, and resurgence of the pandemic in Europe/UK, we increase our COE from 8.0% to 8.3%, and our fair value estimate hence decreases from S$1.03 to S$0.97. BUY.

Source: OCBC Research - 3 Nov 2020