CapitaLand Ascott Trust HMN (CLAS) has reported a 16% y-o-y rise in distribution per stapled security (DPS) of 6.57 cents in FY2023 for the 12 months to end-December 2023.
This is both higher than the 5.67 cents recorded in FY2022 and the 6.4 cents recorded in FY2019, pre-Covid-19. The DPS is also higher than the DPS recorded in FY2018.
DPS for 2HFY2023 was up 14% y-o-y to 3.80 cents and CLAS’ total distribution for 2HFY2023 grew 24% y-o-y to $140.8 million.
In a Jan 29 annoucement, CLAS’ manager says its properties saw strong demand as international travel continued to recover. CLAS’ gross profit for 2HFY2023 rose 12% y-o-y to $183.9 million.
CLAS’ revenue per available unit (RevPAU) in 2H2023 reached 103% of pre-pandemic levels, or 2HFY2019, on a pro forma basis, increasing by 10% y-o-y to $157. RevPAU also rose 23% y-o-y to $148 for FY 2023.
In 4Q2023, the majority of CLAS’ key markets such as China, Japan, the US and Vietnam also registered y-o-y RevPAU growth.
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Both higher revenue from existing properties and contributions from new acquisitions contributed to revenue growth of 20% y-o-y to $744.5 million.
On a same-store basis excluding the new acquisitions, gross profit and revenue increased by 5% and 8% respectively compared to 2HFY2022. In 2HFY2023, stable income sources contributed about 54% of CLAS’ gross profit, while the remaining 46% was generated from growth income sources.
CLAS achieved a fair value gain of $156 million, about 2% increase in portfolio valuation due to stronger operating performance and outlook for its portfolio despite higher capitalisation rates and discount rates.
Markets with valuation gains include Australia, Europe, Japan, Singapore and the UK, which appears to be a marked difference from valuations in the commercial sector.
CLAS’ average cost of debt is 2.4% per annum as at Dec 31, 2023. CLAS increased its proportion of debt on fixed rates to 81% and has a total of approximately $1.32 billion in cash on-hand and available credit facilities.
With an interest rate cover of 4x, CLAS has a debt headroom of about $2 billion and a gearing of 37.9%, well below the 50% gearing limit allowable under the property funds appendix issued by the Monetary Authority of Singapore.
Asset enhancements and acquisitions
Standard at Columbia in the US, a student accommodation property, was topped out in June 2023 and received its first batch of students in August 2023.
In Singapore, construction of the new Somerset serviced residence at the popular riverfront lifestyle and entertainment precinct of Clarke Quay is slated for completion in 2H2025.
Riverside Hotel Robertson Quay was rebranded and unveiled as The Robertson House by The Crest Collection in October 2023. The asset enhancement initiative (AEI) is on track for full completion in 1Q2024. AEI for the seven other properties are set to be completed between 2024 and 2026.
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In August 2023, CLAS’ managers raised $300 million via a $200 million private placement and a $100 million preferential offering. CLAS issued 191,755,000 new stapled securities on Aug 14, 2023.
Its unit price fell from some $1.12 before the announcement to a low of 96 cents near the end of that month.
With the funds raised, CLAS completed the $530.8 million yield-accretive acquisition of three prime lodging properties in London, Dublin and Jakarta in November 2023.
For the existing stapled securityholders, CLAS paid an advanced distribution of 0.701 cents per stapled security on Oct 11, 2023. This distribution was for the period from July 1, 2023 to Aug 13, 2023, in lieu of the semi-annual distribution.
CLAS will pay 3.095 cents to stapled securityholders on Feb 29 based on the distribution income from Aug 14, 2023 to Dec 31, 2023. Semi-annual distributions will resume thereafter.
Earlier this month, and after the FY2023 reporting period, CLAS completed the turnkey acquisition of Teriha Ocean Stage, a 258-unit rental housing property in Fukuoka, Japan at an estimated net operating income yield of about 4% on a stabilised basis.
Bob Tan, chairman of CapitaLand Ascott Trust Management Limited and CapitaLand Ascott Business Trust Management (the Managers of CLAS), says a balanced portfolio of stable and growth income streams enables CLAS to capture growth opportunities while remaining resilient.
He adds: “As part 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.”
Serena Teo, chief executive officer of the managers of CLAS, says: “Through our active portfolio reconstitution and AEI, we are enhancing the quality of our portfolio to create further value for stapled securityholders. We have eight properties undergoing or will undergo AEI. The AEI is expected to uplift the value of the properties post completion. Looking ahead, the diversification of CLAS’ portfolio across geographies, lodging asset classes and contract types will continue to provide income stability.”
Units in CLAS closed 0.5 cents lower, or 0.53% down, at 93 cents on Jan 26.
