Ascott Residence Trust: Reit’s dividends up

But CEO warns of impact from global slowdown

SERVICED apartments owner Ascott Residence Trust is offering a 9-per-cent higher dividend payout to unitholders for the second quarter after room rates increased.

It yesterday announced a total distributable income of $13.3 million, or 2.19 cents per unit, thanks to growth across its portfolio, which comprises 37 serviced-apartment residences across Asia.

“This comes on the back of good acquisitions last year, as well as good organic growth across the portfolio,” said Mr Chong Kee Hiong, chief executive of the real estate investment trust (Reit).

However, he said the next few months may prove to be more challenging for the serviced residences sector, as the external global slowdown impacts business travel. Hence, the Reit’s portfolio in Singapore, Japan, and the Philippines may see a slightly weaker performance for the second half of the year.

While the two residences here – Somerset Grand Cairnhill and Somerset Liang Court – have seen good growth because of high room and occupancy rates, Mr Chong said customers are “more cautious now”.

“Some of our tenants, instead of renewing for six or nine months, are doing it on a monthly basis,” he said. “With rates increased over the last two years, most companies have not increased their accomodation budget for staff. Some businesses have been displaced to condominium housing.”

Some markets that look attractive for acquisitions include emerging ones such as China, Vietnam and India, but for now, the Reit is focused on organic growth, said Mr Chong.

In China, the Reit’s performance has slowed due to shorter stays by business travellers as a result of more stringent visa entry requirements ahead of the Olympics. There has been a clampdown on convention business and some buildings and factories have also delayed their opening dates, so this has affected some tenants’ start date.

“Post Olympics, the Chinese authorities will be pro-business again,” said Mr Chong. He added that Ascott properties in Vietnam and Australia will also see better performance in the second half of the year.

Source : Today – 24 Jul 2008

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