Exchange rate movements set to pad Ascott Residence Trust's profits

Up to 1% increase anticipated.

OCBC notes that during its 2Q13 analyst briefing with Ascott Residence Trust, management expressed that it believed that the whole portfolio's RevPAU for 2H13 will be flat or slightly higher than 1H13, assuming that exchange rates stay constant for the rest of the year.

"We analyzed movements in the average spot exchange rates for the various currencies in which ART receives its revenue in. Assuming flat RevPAU/rental income in local currency terms on a HoH basis for 2H13, we note that the overall exchange rate movements for 2H13 so far could actually increase ART’s gross profit by ~1.0% HoH, chiefly due to improvements in EUR and GBP versus the SGD," argued OCBC.

"Assuming no change in the asset values in local currency terms, we estimate a ~0.8% increase in portfolio value. Going forward, ART's geographically diversified portfolio in this volatile environment will provide some resilience to negative FX movements," it added.