ARA H-Trust posts US$3m net property loss for H2; no distributable income

ARA US Hospitality Trust (ARA H-Trust) posted a net property loss of US$3 million and no distributable income for the second half ended Dec 31, 2020, after taking fixed costs into consideration.

This came as the Covid-19 pandemic "adversely impacted" the stapled group's portfolio performance, with a significant drop in hotel occupancies and temporary hotel closures resulting in significant declines in revenue, the manager said on Wednesday in a bourse filing.

ARA H-Trust projected a net property income of US$31.1 million, a distributable income of US$21.1 million and distribution per stapled security of 3.72 US cents in its initial public offering (IPO) forecast.

Revenue for the six months ended December 2020 dropped 54.9 per cent to US$38.8 million, from US$86.1 million a year ago. Revenue was 60.3 per cent lower than its forecast of US$97.7 million. Average daily rate stood at US$102, missing the IPO forecast by 22.1 per cent.

Operating expenses narrowed to US$32 million, from US$55.4 million a year ago, as the manager implemented plans to substantially reduce operating costs, including the temporary suspension and consolidation of hotel operations, and comprehensive cost and labour reductions.

Total property value stood at US$686.9 million as at Dec 31, 2020, down 2.5 per cent from US$704.7 million a year ago. Valuation declined by 13.5 per cent on Covid-19 pandemic impact, partially offset by the acquisition of the Marriott portfolio in January 2020.

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ARA H-Trust's portfolio recorded occupancy of 41 per cent for FY2020, compared with its forecast of 77 per cent.

The manager said all 41 properties within the stapled group's portfolio are open and generating positive cash flows from operations since July 2020.

ARA H-Trust remains in a secure financial and liquidity position to meet its operational needs and financial commitments, the manager said. As at end-December 2020, the stapled group had US$26.8 million cash on hand and aggregate leverage of 48.2 per cent. Lender banks also provided a further extension to a financial covenant waiver up to June 2021.

For the full year ended Dec 31, 2020, ARA H-Trust recorded a net property loss of US$5 million, compared with an IPO forecast of net property income of US$60.6 million. There was no distributable income, compared with an IPO forecast of US$40.8 million. Revenue for the full year stood at US$78.2 million, missing the IPO forecast of US$192.2 million by 59.3 per cent.

ARA H-Trust, which listed on the Singapore Exchange in May 2019, is a stapled group comprising ARA US Hospitality Property Trust, a real estate investment trust, and ARA US Hospitality Management Trust, a business trust.

Stapled securities of ARA H-Trust were trading 2 per cent or S$0.01 lower at S$0.49 as at 11.05am on Wednesday.