What Investors Should Know About Ascott Residence Trust’s Latest Earnings and Valuation
Ascott Residence Trust (SGX: A68U) is a REIT that invests mainly in hospitality-related assets. Its portfolio currently consists of 73 properties with 11,417 units. These properties are located in 38 cities across 14 countries in the Americas, Asia Pacific, and Europe. The REIT’s sponsor is local real estate giant, CapitaLand Limited (SGX: C31).
There are two things about Ascott Residence Trust that investors may want to know about: Its latest financial performance and valuation.
Ascott Residence Trust released its results for the second quarter of 2017 just last week. Here’s a table showing important financial numbers from the REIT for both the reporting quarter and the same quarter a year ago:
Source: Ascott Residence Trust 2017 second quarter earnings
We can see that the REIT’s revenue, gross profit, unitholders’ distribution, and revenue per available unit (RevPAU) had all displayed year-on-year growth in the second quarter of 2017. The only exception was the distribution per unit, which fell sharply because of a much larger unit count.
The increase in the REIT’s RevPAU is noteworthy because the hospitality sector has been in a challenging environment of late.
There are two useful valuation metrics for assessing REITs. They are the price-to-book (PB) ratio, and the distribution yield.
The table below shows Ascott Residence Trust’s PB ratio and distribution yield. It also shows the respective averages for the two valuation metrics for the 39 REITs that are in Singapore’s stock market.
Source: SGX Stock Facts; data as of 25 July 2017
We can observe that Ascott Residence Trust is trading at a discount to its peers in terms of the distribution yield and PB ratio.