SINGAPORE: CapitaLand Ascott Trust (CLAS) reports a 16% y-o-y increase in the fiscal year ending Dec 2023. The distribution per stapled security (DPS) reached 6.57 cents, surpassing the 5.67 cents recorded in FY2022 and the pre-COVID-19 figure of 6.4 cents in FY2019. It is also higher compared to FY2018, The Edge Singapore reports.
The second half of FY2023 contributed significantly to this positive performance, with DPS increasing by 14% to 3.80 cents. CLAS’ total distribution for 2HFY2023 showed a remarkable 24% YoY growth, amounting to $140.8 million.
In a recent announcement on Jan 29, CLAS’ manager attributed the strong financials to heightened demand for its properties as international travel continued its recovery. Gross profit for 2HFY2023 rose by 12% YoY, reaching $183.9 million.
CLAS’ revenue per available unit (RevPAU) in 2H2023 stood at 103% of pre-pandemic levels, marking a 10% YoY increase to $157. For FY2023, RevPAU witnessed a substantial 23% YoY rise, settling at $148.
Key markets such as China, Japan, the US, and Vietnam experienced YoY RevPAU growth in 4Q2023, contributing to an overall revenue surge of 20% YoY to $744.5 million. Existing properties and new acquisitions both played a role in this growth.
Excluding new acquisitions on a same-store basis, gross profit and revenue in 2HFY2023 increased by 5% and 8%, respectively, compared to the same period in the previous fiscal year.
CLAS achieved a fair value gain of $156 million, reflecting a 2% increase in portfolio valuation, thanks to a stronger operating performance and positive outlook. Valuation gains were notable in markets such as Australia, Europe, Japan, Singapore, and the UK.
As of Dec 31, 2023, CLAS maintained an average cost of debt at 2.4% per annum. The company strategically increased its proportion of debt on fixed rates to 81%, holding approximately $1.32 billion in cash and available credit facilities.
With a healthy interest rate covering 4x, CLAS has a debt headroom of about $2 billion, keeping its gearing at a manageable 37.9%, well below the 50% limit set by the Monetary Authority of Singapore for property funds.
Asset Enhancements and Acquisitions
CLAS embarked on a strategic path to enhance its portfolio through acquisitions and asset enhancements. The recently completed turnkey acquisition of Teriha Ocean Stage in Fukuoka, Japan, added a 258-unit rental housing property to CLAS’ diverse portfolio.
In the US, the student hotspot, Standard at Columbia, hit a milestone in Jun 2023 and welcomed its first batch of students in August.
Over in Singapore, a brand-new Somerset serviced residence along the lively Clarke Quay riverfront is set to be ready by the second half of 2025.
Meanwhile, Riverside Hotel Robertson Quay got a makeover and is now The Robertson House by The Crest Collection since October 2023. Expect full enhancements to wrap up by early 2024, with seven more properties getting a facelift between 2024 and 2026.
Additionally, CLAS completed the yield-accretive acquisition of three prime lodging properties in London, Dublin, and Jakarta in Nov 2023, following a successful fundraising initiative in Aug 2023.
Despite a temporary dip in unit price from $1.12 to 96 cents after the fundraising announcement, the funds raised were pivotal in executing these strategic acquisitions. Existing stapled security holders received an advanced distribution of 0.701 cents per stapled security on Oct 11, 2023.
Looking ahead, CLAS plans to pay 3.095 cents to stapled security holders on Feb 29 based on the distribution income from Aug 14, 2023, to Dec 31, 2023, resuming semi-annual distributions thereafter.
Bob Tan, Chairman of CapitaLand Ascott Trust Management Limited and CapitaLand Ascott Business Trust Management, highlighted the importance of maintaining a balanced portfolio with stable and growth income streams. Tan emphasised the success of CLAS’ active portfolio reconstitution strategy.
“We completed 18 yield-accretive acquisitions in the past two years, boosting CLAS’ income. In the last seven months, we also announced the divestment of nine mature properties at a premium to book value,” he said.
Serena Teo, CEO of the managers of CLAS, echoed Tan’s sentiments, noting that active portfolio reconstitution and asset enhancement initiatives aim to uplift the value of properties post-completion.
Teo expressed, “Looking ahead, the diversification of CLAS’ portfolio across geographies, lodging asset classes and contract types will continue to provide income stability.”
Despite a minor dip in unit price, closing at 93 cents on Jan 26, CLAS’ strong financials and strategic initiatives position it for continued growth in the real estate landscape. /TISG
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