Ascott Residence Trust to have emerging markets form 70% of its portfolio

Ascott Residence Trust is setting itself a mid-term target of having emerging markets form 70 per cent of its portfolio.

The trust’s current holdings of S$1.5 billion are split 50-50 between what it terms stable economies like Japan, and emerging ones like Vietnam.

It made the comment when announcing its first half earnings on Wednesday.

Emerging markets are proving to be a lucrative proposition for Ascott Residence Trust, especially in an environment of high inflation and economic uncertainty.

Chong Kee Hiong, CEO, Ascott Residence Trust, said: “The emerging markets we focus on would be like China, Vietnam and India. These are the markets with potential. Even though they may be facing different issues, in the medium term, they will be good.”

The plan is to grow the overall pie, with emerging markets portfolio accounting for about 70 per cent of the total portfolio. Ascott Residence said it will do this through acquisitions and organic growth.

It said Singapore remains a strong market, comprising 27 per cent of its total portfolio. The REIT also has room to borrow to fund its ventures into new and growing markets.

Mr Chong continued: “Our gearing is 34.5 per cent which is quite low – lower than the property fund guidelines allowable of 60 per cent. But our target is to maintain it between 40 and 45 per cent, from 34.5 to 45 per cent – we are talking about S$300 million.”

For its fiscal first half, Ascott is planning to distribute 4.52 Singapore cents per unit, up 26 per cent on year.

The trust reported a total distributable income of S$27.5 million, which is 36 per cent higher than the year-ago period.

It believes its extended stay business model and geographical diversity will continue to provide income stability to the portfolio. – CNA/vm

Source : Channel NewsAsia – 23 Jul 2008

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