ARA US Hospitality Trust - DBS Research 2024-02-28: Better Days Ahead

• ARA US Hospitality Trust (SGX:XZL)'s 2H23 revenue increased 2.0% y-o-y to US$89.5m from US$87.8m in 1H23. Gross operating profit (GOP)/net property income (NPI) grew 5.3%/26.4% y-o-y to US$31.3m/US$25.7m, respectively.
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• 2H23 DPU lifted to US$0.01929 compared to US$0.01627 in 2H22, though it fell short of our estimate.

2H23 was a miss, albeit continued improvement in margins.

• ARA US Hospitality Trust's portfolio valuation stayed flattish at US$751.4m (+0.5% y-o-y), despite the increase in capitalisation rates, as the newly acquired Hilton hotel helped mitigate the decline in the valuations of the Hyatt portfolio. NAV declined significantly to US$0.74 as at Dec 2023 from US$0.80 as at Dec 2022, primarily attributable to the decline in the cash balance.
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• 74.5% of ARA US Hospitality Trust's debt is hedged to fixed interest rates, and all debt maturing in FY24 has been refinanced while the manager is proactively seeking to refinance the upcoming US$77m loan due in Feb 2025.

Corporate travel has yet to fully return.

• Read more at SGinvestors.io.

Tabitha FOO DBS Group Research | Derek TAN DBS Research | Geraldine WONG DBS Research | https://www.dbs.com/insightsdirect/ 2024-02-28 SGinvestors.io

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