Shorter income visibility due to shorter forward bookings
Corporate bookings and domestic leisure demand have picked up. ART has received 3Q/4Q bookings from some corporate guests who intend to stay longer. However, as the pandemic remains in a state of flux, leisure guests are booking less than one month in advance.
Acquisitions likely in extended-stay asset class
The extended-stay segment comprises rental housing and purpose-built student accommodation whose average length of stay is about a year. These assets’ occupancy can reach a high 95% throughout the year, providing stable income for ART. Currently at 7% of its AUM, ART intends to increase the figure to 10-15%.
Downgrade to ACCUMULATE, unchanged DDM-based TP of S$1.17
We lower FY21e/22e DPUs by 0.9%/3.6% to reflect its divestment of Somerset Xu Hui and acquisition of the Sapporo asset, partially offset by S$20mn of capital distribution assumed for FY21e (FY20: S$45mn). The recovery timeline may be more protracted in the face of virus mutations and new waves of the virus.