Gordon Tang’s Acrophyte trust tumbles 14.3% after distribution suspended
Hospitality trust’s H1 distributable income dips 35.8% to US$1.8 million; distribution suspended until H2 2028
[SINGAPORE] Acrophyte Hospitality Trust (AHT) tumbled on Thursday (Aug 6) after the managers of the trust said it would suspend distribution following a poor first half-year.
The trust chalked up a distributable income of US$1.8 million for the six months ended Jun 30, down 35.8 per cent year on year from US$2.8 million.
It will suspend distribution to its stapled securityholders from H1 till H2 2028, due to the “significant capital requirements of the stapled group and its limited funding capacity”, the managers noted.
“Distributions may recommence earlier if circumstances permit,” they added.
Investors reacted swiftly to the news, sending the stapled security units down 14.3 per cent or US$0.033 to close at US$0.197. About 3.4 million units changed hands.
For the first six months, revenue declined 2.6 per cent on the year to US$76.1 million, from US$78.1 million previously.
Net property income also fell 6.1 per cent to US$16.9 million for the period, from US$18 million a year prior.
Operating profit dipped 5.9 per cent to US$25.1 million, from US$26.7 million.
The trust’s managers said its rising capital expenditure stems mainly from renovations and ongoing portfolio maintenance.
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“To preserve liquidity during the Covid-19 pandemic, (the) renovations were deferred, resulting in a substantial backlog of capex.”
The managers estimated that around S$100 million of capex is required over FY2025 to FY2027, of which US$30.5 million was incurred in FY2025. About US$26.6 million is expected in FY2026, and US$45 million in FY2027.
Currently, its estimated capex has increased due to higher imported material and labour costs arising from changes in US trade and immigration policies, and the ongoing geopolitical conflict.
At the same time, the managers of the trust noted limited debt headroom to fund the capex, and do not recommend taking on additional debt.
This comes as AHT’s aggregate leverage as at Jun 30 stood at 43.2 per cent, which approaches the 50 per cent gearing limit of the trust. So, any further downward revaluation of the portfolio could trigger a breach of this limit.
Additionally, its average cost of debt stood at 6.1 per cent per annum, which exceeds the trust’s distribution yield based on the prevailing unit price and FY2025 distributions.
“Any further debt-funded capital expenditure would be dilutive to distributable income,” a bourse filing noted.
Weighted average debt maturity was also at 0.8 year, with an interest coverage ratio of 1.6 times.
Acrophyte (including Acrophyte Asset Management and its related entities) is controlled by Singapore-based property tycoons Gordon Tang and his wife, Celine Tang.
