70% of profits in the quarter were from stable income sources with the remaining 30% from growth income sources

 

[SINGAPORE] CapitaLand Ascott Trust&rsquo s : HMN -0.58%(Clas) managers said in a business update on Monday (Apr 28) that the trust&rsquo s gross profit rose 4 per cent year on year in the first quarter of 2025.

 

Gross profit from new properties in the quarter replaced the drop in gross profit from divestments in 2024, the managers said, driven by stronger performance from properties the trust renovated in 2024. These new properties include lyf Funan Singapore, acquired on Dec 31, 2024, as well as Japan hotels ibis Styles Tokyo Ginza and Chisun Budget Kanazawa Ekimae, both bought on Jan 31, 2025.

 

Seventy per cent of profits in the quarter were from stable income sources, the managers said, with the remaining 30 per cent from growth income sources. Such stable income sources included management contracts of longer-stay properties such as rental housing and student accommodation, as well as master leases and management contracts with minimum guaranteed income. Growth income was largely contributed by management contracts of hospitality properties.

 

Excluding acquisitions and divestments, Clas&rsquo s gross profit was 1 per cent higher on a same-store basis, said the managers.

 

In most key markets in the trust&rsquo s portfolio, revenue per available unit (RevPAU) for Q1 2025 grew year on year, with its Australia, Singapore, United Kingdom and United States (US) portfolios registering growth of between one and 12 per cent. Its Japan portfolio, however, registered an 11 per cent contraction on the year.

 

In the US portfolio, making up 19 per cent of the trust&rsquo s total assets, hotel RevPAU in the quarter climbed 11 per cent on the year to reach US$160, driven by strong leisure demand, an increased proportion of corporate bookings, as well as long weekends and major conventions.

ents towards the US might dampen international leisure travel, the managers said that a higher proportion of domestic guests would mean the trust&rsquo s hotels remain less affected.

 

The trust&rsquo s Singapore portfolio, which made up a further 19 per cent of total assets, saw serviced residences (SRs) and hotel RevPAU in the quarter inch upwards by 1 per cent year on year to S$183. On a same-store basis, however, RevPAU fell 3 per cent year on year.

 

This fall was due to fewer high-profile concerts, such as the one by Taylor Swift, or biennial events, such as the Singapore Airshow, under the meetings, incentives, conferences and exhibitions category that took place in Q1 2024, Clas&rsquo s managers said.

 

The portfolio&rsquo s performance was nevertheless mitigated by stronger operating performance from The Robertson House by The Crest Collection and long stays at SRs.

 

The managers expect that demand for corporate and relocation stays for the Singapore portfolio will be subdued in the second quarter of 2025, while transient demand could see an uplift during concert and event periods.

 

In Japan, the trust&rsquo s managers noted that the acquisition of two Japan hotels, ibis Styles Tokyo Ginza and Chisun Budget Kanazawa Ekimae, would fully replace the income of four divested properties in the Japanese portfolio. The acquisitions would bring an accretive growth of 1.6 per cent to dividend per share on a pro forma basis from FY 2024, while raising blended net operating income by 4.3 per cent.

 

The managers noted that these hotels would be supported by leisure and business demand drivers, with ibis Styles Ginza Tokyo located in Tokyo&rsquo s shopping and entertainment district, while Chisun Budget Kanazawa Ekimae is situated in a popular site for domestic travel.

 

The trust reported a gearing ratio of 39.9 per cent, with an interest coverage ratio of 3.2 times. The trust said it is monitoring recent volatility and reviewing options for its S$250 million perpetual securities, which reset on June 30, 2025, with a view towards managing its capital structure.

 

Recent macroeconomic uncertainties are likely to impact Clas through raised costs, lower lodging demand and volatility in interest rates and foreign currencies, the managers said.

 

Even so, the trust&rsquo s diversified portfolio and its stable income sources, which comprise 60 to 70 per cent of gross profit, could mitigate this effect, Clas&rsquo s managers said.

 

Net asset value per stapled security was at S$1.11, with total available funds standing at around S$1.43 billion, said the managers.

CapitaLand Ascott Trust : HMN +0.58% (CLAS) is a stapled group consisting of CapitaLand Ascott Real Estate Investment Trust and CapitaLand Ascott Business Trust.

 

CLAS is the largest lodging trust in Asia-Pacific with an asset value of S$8.8 billion as at Dec 31. It is managed by CapitaLand Ascott Trust Management and CapitaLand Ascott Business Trust Management (the CLAS managers), both of which are wholly owned subsidiaries of CapitaLand Investment. 

 

On Feb 3, both the chairman and CEO of the CLAS managers increased their direct interest in the stapled trust. Chairman and non-executive independent director Lui Chong Chee acquired one million stapled securities at an average price of S$0.893 per unit, increasing his direct interest from 0.03 per cent to 0.05 per cent.

 

On the same day, CEO and executive non-independent director Serena Teo purchased 500,000 stapled securities at S$0.895 per unit, increasing her direct interest from 0.01 per cent to 0.02 per cent.

 

On Jan 27, CLAS reported that its H2 FY24 (ended Dec 31) gross profit increased 8 per cent from H2 FY23. Lui emphasised CLAS&rsquo commitment to delivering stable distributions to stapled security holders. He also highlighted that the strong performance in FY24 was driven by active portfolio reconstitution, operational maximisation and asset enhancements.

 

CLAS completed over S$500 million in divestments and about S$350 million in accretive investments in 2024. The proceeds were used to reduce debt and fund asset enhancement initiatives (AEIs). Lui also affirmed the focus on strengthening operating performance to enhance core distributions. 

 

He has been the chairman of the CLAS managers since April 2024, and has held several key positions throughout his career.

 

He was the managing director and CEO of Far East Orchard, previously served as the group CFO at Raffles Medical Group and held senior roles at CapitaLand and its subsidiaries. Before that, he was the managing director and senior vice-president at Citicorp Investment Bank (Singapore).

 

Teo has been the CEO of the CLAS managers since 2022. She previously served as deputy CEO and held various leadership roles at Ascendas Funds Management, Ascendas Services and Ascendas Land. Her experience also includes positions at EDB Investments and Chartered Semiconductors Manufacturing.

 

With the FY24 results, Teo highlighted that while the CLAS portfolio reconstitution strategy may cause short-term income fluctuations, it will enhance long-term value for stapled security holders.

 

She also maintained that despite macroeconomic uncertainties, CLAS remains optimistic about lodging demand and is focused on strengthening its portfolio and earnings through geographic diversification, varied lodging asset classes and disciplined capital management.

 

As at Dec 31, CLAS&rsquo international portfolio includes 100 properties with more than 18,000 units in 45 cities across 16 countries in Asia-Pacific, Europe and the United States. Most of these properties operate under the Ascott, Somerset, Quest and Citadines brands. 

 

For its FY24, CLAS&rsquo revenue per available unit (RevPAU) increased 5 per cent from S$148 to S$156. Total core distribution for H2 FY24 increased 5 per cent from H2 FY23 to S$117 million, bringing the FY24 core distribution per stapled security (DPS) to 5.49 Singapore cents, 1 per cent higher than FY23. The core DPS excludes non-periodic items from realised exchange gains on cross currency swaps and foreign currency loan repayments.

 

The CLAS managers highlighted that stronger operating performance, acquisitions, and completed AEIs helped offset the impact of divestments, ongoing AEIs, higher financing costs, and depreciation of most foreign currencies against the Singapore dollar.

 

CLAS maintains a proactive and prudent capital management strategy with an average debt cost of 3 per cent per annum as at Dec 31. Its gearing is 38.3 per cent, well below the 50 per cent limit set by the Monetary Authority of Singapore (MAS), with CLAS maintaining around S$1.6 billion in cash and available credit facilities.

According to SGX filings, Serena Teo, CEO of CapitaLand Ascott Trust ' s (CLAS) trustee-manager, bought 500,000 stapled securities at $0.895. This more than triples her direct interest in CLAS from 0.005% to 0.018%.

 

Lui Chong Chee, chairman of CLAS&rsquo s manager, bought 1,000,000 stapled securities at $0.8925. This almost doubles his direct interest in CLAS from 0.027% to 0.053%.

 

In CLAS&rsquo s FY2024 results on January 27, CLAS announced its commitment to distribute stable core distributions, through enhancing core distribution income from operating performance and distributing non-periodic gains and/or divestment gains when appropriate. 

 

CLAS&rsquo s core distribution per stapled security (DPS) for 2HFY2024 rose 3% y-o-y to 3.08 cents while DPS for the same period stood at 3.55 cents, taking total DPS for the FY2024 to 6.1 cents.

The purchase is funded by yen-denominated debt and the proceeds from its divestment of four properties in Japan

 

CAPITALAND Ascott Trust (Clas) : HMN 0% has acquired two freehold limited-service hotels in Japan &ndash ibis Styles Tokyo Ginza and Chisun Budget Kanazawa Ekimae &ndash for 21 billion yen (S$178.5 million). 

 

The acquisition is part of Clas&rsquo portfolio reconstitution strategy to enhance the quality of its portfolio and deliver stable returns to its stapled securityholders, said Serena Teo, chief executive of its managers (CapitaLand Ascott Trust Management and CapitaLand Ascott Business Trust Management) on Friday (Jan 31).

 

The deal is priced at an 8.3 per cent discount to independent valuation, and has a distribution per stapled security accretion of 1.6 per cent on a FY2024 pro forma basis. Meanwhile, the blended net operating income (NOI) yield of the acquisition is 4.3 per cent in FY2024.  

 

The purchase was funded by yen-denominated debt, as well as the proceeds from Clas&rsquo divestment of four properties in Japan, adopting a natural hedge against currency fluctuations.

 

It divested Infini Garden, a rental housing property in Fukuoka, and three hotels in Osaka &ndash Hotel WBF Honmachi, Hotel WBF Kitasemba East and Hotel WBF Kitasemba West.  

 

Teo noted that the FY2024 NOI yield of the two hotels is 230 basis points higher than the blended exit yield of about 2 per cent for the four previous divestments in Japan. 

 

She said: &ldquo By swiftly redeploying divestment proceeds into these higher-yielding assets, we have fully replaced the income from the four divested properties. Clas continues to focus on delivering growth by ensuring our portfolio is well-positioned to capture lodging demand.&rdquo

 

Its managers anticipate strong demand for the newly acquired hotels in Japan, due to their prime locations.

 

The 224-unit ibis Styles Tokyo Ginza is situated in the capital&rsquo s premium shopping and entertainment district. Meanwhile, the 392-unit Chisun Budget Kanazawa Ekimae is just a 10-minute drive from the historical city&rsquo s central business district, as well as major event and sports venues.

 

Following the recent acquisition, 18 per cent of Clas&rsquo total assets are located in Japan. Its Japan portfolio now comprises two serviced residences, four hotels, 23 rental housing properties and a student accommodation property. 

 

In FY2024, Clas&rsquo Japan properties achieved the strongest performance among its key markets, with revenue per available unit for its serviced residences and hotels there growing 37 per cent year on year to 23,987 yen in the fourth quarter of 2024.

 

Over the past 12 months, Clas has made investments totalling about S$530 million. This includes the recent purchase of ibis Styles Tokyo Ginza and Chisun Budget Kanazawa Ekimae.

 

These acquisitions offer higher yields than Clas&rsquo divestments, boosting its income distribution, it noted.

The distribution will be paid out on Feb 28, after the record date on Feb 6

THE manager of CapitaLand Ascott Trust : HMN 0% (Clas) sees potential unevenness in near-term performance, owing to a softer outlook in the Singapore market and properties undergoing asset-enhancement initiatives (AEIs).

 

This followed the trust posting a 7 per cent fall in distribution per stapled security (DPS) to S$0.0355 for the second half ended Dec 31, 2024, from S$0.038 in the year-ago period.

 

At an earnings briefing on Monday (Jan 27), chief executive of Clas&rsquo manager Serena Teo attributed the lower overall DPS to a fall in one-off income. This arose from the repayment of foreign currency bank loans and medium-term notes, as well as the settlement of cross-currency interest-rate swaps. 

 

Excluding these non-periodic items, core DPS grew 3 per cent year on year to S$0.0308 from S$0.03.

 

The results came on the back of higher revenue for the half-year period, which was up 6 per cent at S$423.2 million, from S$397.6 million in the same period the year before. Gross profit increased 7.7 per cent to S$198 million, from S$183.9 million in H2 FY2023. 

 

Meanwhile, total distribution for the half-year was down 4 per cent at S$134.8 million, from S$140.8 million in the year-ago period. 

 

Foreign-exchange losses amounted to S$14.3 million in H2 FY2024, from a gain of S$11.5 million in H2 FY2023. Operating expenses were up 51 per cent at S$5.5 million, and finance costs rose by 15 per cent to S$51.7 million. 

 

For the full year, total distribution fell 2 per cent on year to S$231.2 million from S$237 million, while revenue rose 9 per cent on year to S$809.5 million from S$744.6 million.

 

&ldquo You&rsquo re starting to see portfolio reconstitution, which is the combination of AEI completions, ongoing AEIs, as well as the net effect of divestments versus acquisitions coming through, to boost gross profit in the portfolio,&rdquo said Teo.

 

She believed that was &ldquo more than sufficient&rdquo for Clas to offset the effects of weaker foreign currencies against the Singapore dollar, and higher financing costs from elevated interest rates. 

 

For FY2024, DPS stood at S$0.061, down 7 per cent year on year. After adjusting for non-periodic items, core DPS stood at S$0.0549, up 1 per cent from S$0.0544 recorded in the same period the year before.

 

The distribution for H2 will be paid out on Feb 28, after the record date on Feb 6.

 

Operational improvements

Teo also highlighted that Clas was &ldquo firing on all operational cylinders&rdquo . Revenue per available unit was up 6 per cent to S$167 for H2 FY2024, thanks to continued strong demand for international travel. 

 

As at Dec 31, 2024, the trust had a &ldquo well-staggered&rdquo master lease expiry, with two master leases &ndash one in Japan and another in Australia &ndash due to expire in the second half of 2025. The majority of master leases &ndash 67 per cent &ndash are due in 2029 and beyond. 

 

Teo said the terms of the two master leases in Japan and Australia are being reviewed, but an overall upside is expected later in the year. Currently, the two contribute less than 3 per cent of the trust&rsquo s gross profit, with the one in Japan accounting for a larger proportion, she added. 

 

At the same time, Clas continued to have &ldquo strong financial capability and healthy liquidity&rdquo in FY2024, the chief executive said. 

 

Net asset value per stapled security stood at S$1.15 as at end-2024. Gearing was 38.3 per cent and predicted to remain below, or at, 40 per cent in the near term. Meanwhile, Clas&rsquo proportion of debt on fixed rates stood at 77 per cent. It also has some S$1.6 billion in cash and available credit facilities.

 

The weighted average debt maturity was 3.7 years, and the average cost of debt remained at 3 per cent a year. These levels are likely to be maintained in 2025, with the general market possibly seeing a moderation in interest rates, save for Japan, said Teo. 

 

In the next quarter, the chief executive expects Clas to experience &ldquo unevenness on operational income&rdquo , as a result of divestments or properties undergoing AEIs. 

 

The Singapore market is anticipated to be softer as well, coming off a high base in Q1 2024, she said. Hotel rates and international visitor arrivals spiked last March, particularly for the duration of global pop star Taylor Swift&rsquo s concerts in the city-state. 

 

But the other key markets in Clas&rsquo portfolio &ndash including Japan, Australia and France &ndash are predicted to see healthy demand and a positive outlook, said Teo. 

 

In the meantime, the manager will continue to focus on its core operational performance as the linchpin of Clas&rsquo distribution. &ldquo This will include very active asset management and asset enhancements&hellip to drive performance and returns, as well as portfolio reconstitution &ndash one of which includes divesting and redeploying proceeds to higher-yielding acquisitions,&rdquo said Teo. 

 

&ldquo To mitigate the short-term impact of our upcoming AEIs, Clas will distribute past undistributed divestment gains to keep distributions stable,&rdquo she added. For instance, top-ups may be included in the trust&rsquo s non-periodic distributions to &ldquo counter the temporary impacts of AEIs&rdquo , but this will be scaled back as major AEIs are completed. 

 

The chief executive also noted opportunities to be unlocked across Clas&rsquo 100 properties. including those in Japan, where the trust had 28 properties as at end-2024.

 

The hotel and serviced residences segment could expand to new cities where industries, such as the semiconductor sector, are proliferating, said Teo. That may drive job growth and, consequently, domestic migration. 

 

There are also some opportunities in Europe to redeploy capital through AEIs or acquisitions of higher-yielding properties, she said.

This includes four Oakwood Premier signings in Adelaide, Bali, Shenzhen and Singapore

 

ASCOTT, the wholly owned lodging business unit of CapitaLand Investment : 9CI 0%, has secured 16 new signings under the Oakwood brand in 2024, up 30 per cent from the previous year.

 

This includes a bumper crop of four Oakwood Premier signings into new cities &ndash Adelaide, Bali, Shenzhen and Singapore &ndash since the brand refreshed early last year, said the group on Thursday (Jan 23).

 

With the new signings, Ascott&rsquo s Oakwood portfolio now comprises nearly 100 properties that are both operational and in the pipeline. Its global footprint spans 14 countries and 50 cities, including Tokyo, Jakarta, Beijing and Manila.

 

Ascott&rsquo s chief growth officer Serena Lim noted that Oakwood remains &ldquo one of the fastest-growing brands in Ascott&rsquo s portfolio&rdquo .

 

&ldquo Oakwood is well-placed to meet the needs of guests seeking a seamless balance between work and leisure. These new signings continue to drive Oakwood&rsquo s expansion into the resort sector,&rdquo said Lim.

 

Citing a research by Forbes, Ascott pointed out that the business and leisure travel, or bleisure, market is valued at nearly US$600 billion and it is expected to grow even more over the next decade.

 

Tan Bee Leng, Ascott&rsquo s chief commercial officer, said: &ldquo As bleisure travel continues to grow, our guests are increasingly seeking distinctive culinary experiences. This reflects a broader shift towards experiential travel, where food acts as a gateway to understanding and appreciating the culture and heritage of each destination.&rdquo

 

Oakwood is well-positioned to meet this rising demand of culinary tourism, said the group.

 

This comes as all new properties under the refreshed Oakwood brand will feature on-site dining options. As at Jan 23, more than half of Oakwood properties offer dining on-property services, which feature various culinary options, said Ascott.