In its business update for the 1QFY2023 ended March 31, CapitaLand Ascott Trust (CLAS) HMN reported a 59% y-o-y increase in its gross profit, although no numbers were mentioned. The higher gross profit was due to a stronger operating performance and contributions from CLAS’s new properties during the quarter. Excluding its new properties, CLAS’s gross profit rose by 53% y-o-y.
During the quarter, 59% of CLAS’s gross profit was contributed by stable income while 41% was contributed by growth income. The higher proportion of stable income in the 1QFY2023 compared to 4QFY2022 was due to the first quarter being a seasonally softer quarter for transient travel.
In 1QFY2023, CLAS reported revenue per available unit (RevPAU) of $127, 90% higher y-o-y, on higher occupancies and room rates. The quarter’s RevPAU also stood at 93% of the pro forma RevPAU in 1QFY2019, which includes the performance of Ascendas Hospitality Trust’s portfolio. The merger with Ascendas Hospitality Trust was completed on Dec 31, 2019.
All of CLAS’s key markets saw y-o-y increases in their RevPAU with Australia, Japan, Singapore and the US performing at their pre-Covid-19 levels or above.
Japan’s RevPAU, in particular, surged by 351% y-o-y to 12,166 yen ($121.79), which is at 105% of same-store pre-Covid-19 levels after the country’s reopening to independent leisure travellers in October 2022.
Australia’s RevPAU increased by 118% y-o-y to A$155 ($137.57) mainly driven by higher average daily rates (ADR) which surpassed its pre-Covid-19 levels. The market’s outlook for 2QFY2023 remains positive with room rates expected to sustain above pre-Covid-19 levels.
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China’s RevPAU rose by 16% y-o-y to RMB256 ($49.40). The country lifted all domestic travel requirements from December 2022. Inbound travellers were only required to present a negative test result within 48 hours of departure from January onwards. CLAS says it expects to see improved international demand in the coming months as flight frequencies to and from China continue to recover progressively.
France’s revenue rose by 13% y-o-y to EUR5.4 million ($7.9 million) mainly driven by higher ADR as its properties’ operating performance surpassed its pre-Covid-19 levels. According to CLAS, its 2QFY2023 outlook for the country’s portfolio remains positive. The trust adds that demand is expected to come from international leisure and corporate segments, boosted by several city-wide events in Paris. Its luxury La Clef properties are also seeing an increase in leisure bookings from travellers from China.
Singapore’s RevPAU increased by 169% y-o-y to $121. Properties continued to perform well in the 1QFY2023 as corporate demand remained strong, boosted by several large-scale events and fairs. Outlook for the 2QFY2023 also remains positive with a higher number of leisure travellers and stronger corporate demand on the back of holidays and MICE (meetings, incentives, conventions and exhibitions) events in the quarter.
The US’s RevPAU increased by 82% y-o-y to US$138 ($184.62) with the country seeing sustained robust performance at its hotels. The US’s student accommodation portfolio also provided stable income during the quarter. In 2QFY2023, outlook remains positive with more activity and events in New York City compared to the first quarter, which is expected to see an increase in domestic and international transient guests.
Vietnam’s RevPAU rose by 81% y-o-y to 1.29 million Vietnamese dong ($73.40). The improvement was largely driven by demand from leisure and corporate travellers due to an increase in MICE events and tradeshows. The ongoing increase in flights between China and Vietnam are expected to drive visitor arrivals into the latter over time.
In Singapore and the UK, where CLAS has management contracts with minimum guaranteed income, Singapore’s RevPAU for the quarter stood at $362 while the UK’s RevPAU rose by 60% y-o-y to GBP112 ($185.99). The UK’s recovery momentum is said to remain strong with outlook for 2QFY2023 positive on the back of demand from both international corporate and leisure travellers, boosted by several holidays and city-wide events.
In its update, CLAS says it aims to increase its asset allocation in longer-stay accommodation to 25% - 30% in the medium term as longer-stay lodging provides a stable income base. Including the acquisitions announced year-to-date (ytd), around 19% of CLAS’s portfolio is currently in longer-stay accommodation. The trust also seeks to target 70% to 75% of its assets in serviced residences and hotels to capture growth as travel restarts.
In addition, it says it is looking to pursue “suitable” acquisition, asset enhancement and development opportunities going ahead.
As at March 31, CLAS has a net asset value (NAV) per stapled security of $1.13. Its gearing stood at 38.7% with an interest cover of 4.4x. Some 75% of its total debt are also on fixed rates.
CLAS has over 18,000 units across 105 properties in 15 countries as at March 31. It has total assets of $8.0 billion as at Dec 31, 2022.
Units in CLAS closed flat at $1.07 on April 25.
