ARA US Hospitality Trust XZL has reported a distribution per stapled security (DPS) of 1.627 US cents (2.179 cents) for the 2HFY2022 ended Dec 31, 2022, 4.6 times higher than the DPS of 0.355 US cents in the corresponding period the year before.
The better performance comes as the US lodging market continues to recover in the third and fourth quarters during the year. According to the trust, demand for lodging in the country remained resilient and continued to recover led mainly by the pent-up demand for travel from the leisure segment.
In addition, the work-from-home policies were said to have contributed to an expansion of leisure travel days beyond weekends and holidays, further propping lodging demand.
The DPS, which is payable on March 30, brings the trust’s FY2022 DPS to a substantially higher 3.054 US cents from FY2021’s DPS of 0.355 US cents. The year’s DPS, which amounts to a yield of 8% for the FY2022, comes on the back of a stronger operating performance.
“2022 was a successful year for ARA Hospitality US Trust, having weathered the devastating impact of Covid-19 for two consecutive years prior. This success is attributable to the perseverance of both our US and Singapore teams and the quality and resilience of our upscale, select-service portfolio, both of which proved enduring,” says Lee Jin Yong, CEO of the manager.
Revenue for the 2HFY2022 increased by 12.8% y-o-y to US$87.8 million.
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Gross operating profit for the period increased by 12.9% y-o-y to $29.7 million.
Net property income (NPI) increased by 28.9% y-o-y to $20.1 million.
Distributable income for the 2HFY2022 grew by 4.7 times to US$9.4 million from US$2.0 million in the year before.
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FY2022 revenue grew by 29.3% y-o-y to US$169.0 million.
Gross operating profit increased by 41.6% y-o-y to US$57.3 million.
NPI for the FY2022 increased by 66.4% y-o-y to US$41.4 million.
Distributable income surged to US$17.5 million from US$2.0 million in the same period before.
For the FY2022, the trust’s portfolio posted average occupancy of 65.3% and average daily rate (ADR) of US$131, up 8.2 percentage points and 17.2% y-o-y respectively. Revenue per available room (RevPAR) grew by 34% y-o-y to US$85.
On a comparable basis and excluding the five disposed hotels in 2022, the trust’s portfolio valuation was up by 9% y-o-y to US$747.8 million for 36 hotels as at Dec 31, 2022. Taking into account its higher portfolio valuation, the trust’s portfolio aggregate leverage ratio stood at 39.4% with total borrowings of approximately US$326 million. About 82% of the loan portfolio was hedged on interest rate movement as at Dec 31, 2022.
As at Dec 31, 2022, cash and cash equivalents stood at US$50.6 million.
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“Amid the uncertain economic outlook and barring any unforeseen circumstances which includes a prolonged monetary tightening that affects travel spend and poses a significant drag to the recovery of the lodging sector to pre-pandemic levels, the managers are cautiously optimistic that the operating metrics for ARA US Hospitality Trust would further strengthen in 2023,” Lee says.
“Improvements in portfolio occupancy and RevPAR would also stem from the managers’ portfolio optimisation efforts in re-deploying capital into higher-yielding core assets. The managers are actively managing the operating costs of ARA US Hospitality Trust in tandem, alongside prudent capital management,” he adds.
Units in ARA Hospitality US Trust closed 0.5 US cents higher or 1.32% up at 38.5 US cents on Feb 22.
