The manager of ARA US Hospitality Trust XZL has reported a distribution per staples security of 0.747 US cents for its 1HFY2024 ended June, 50.2% lower y-o-y.
This is on the back of higher financing costs as favourable interest rate hedges entered during 2019 matured in February and higher floating interest rates set in. Additionally, recent hedges were made in an elevated interest rate environment.
As a result, the trust recorded a lower distributable income of US$4.3 million, 50.1% lower y-o-y.
Gross revenue was down 2.4% y-o-y to US$83.9 million. Gross operating profit (GOP) and net property income were 3.3% and 4.4% lower y-o-y to US$29.6 million and US$21 million respectively, primarily contributed by the shortfall in gross revenue during the period.
GOP margin remained relatively constant at 35.3% in 1HFY2024 from 35.6% the year before due to cost management measures.
The declines were attributed to interruptions from asset enhancement initiatives (AEI) projects at four hotels, namely Hyatt Place Mystic, Hyatt Place Rancho Cordova, Hyatt Place Omaha and Hyatt Place Secaucus.
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In addition, the lower gross revenue was also due to the dispositions of Hyatt Place Oklahoma City Airport and Hyatt Place Pittsburgh Airport in September 2023 and March 2024, respectively.
“Barring unforeseen circumstances, we remain cautiously optimistic that our operating metrics will improve, driven in particular by the recently renovated hotels,” says the CEO of the manager Lee Jin Yong.
As at 9.14am, units in ARA Hospitality US Trust are trading 3.5 cUS ents lower or 12% down at 25 US cents.
