CAPITALAND Ascott Trust&rsquo s (Clas) gross profit for the first half ended Jun 30 rose 31 per cent year on year to S$154.4 million.

 

Its results were boosted by contributions from new acquisitions and stronger operating performance as travel continued to pick up pace. 

 

About 58 per cent of gross profit for H1 came from properties under master leases, management contracts with minimum guaranteed income, as well as rental housing and student accommodation properties.

 

The remaining came from sources including hotels and serviced residences under management contracts, Clas&rsquo managers said on Thursday (Jul 27). 

 

Revenue shot up by 30 per cent to S$346.9 million from S$267.4 million previously, driven by contributions from the 14 assets Clas acquired last year and in the second quarter of 2023, which were largely longer-stay properties.

 

Revenue per available unit rose 44 per cent to S$138 in H1 on robust lodging demand, with key markets such as Australia, Japan, Singapore, the UK and the US performing above pre-pandemic levels. 

 

Serena Teo, chief executive officer of Clas&rsquo managers, said: &ldquo We expect continued demand for our properties as international arrivals are projected to further recover to between 80 per cent and 95 per cent of pre-pandemic levels by the end of 2023.&rdquo

 

She noted that Clas&rsquo performance is expected to remain resilient despite macroeconomic uncertainties given its geographic diversification, range of lodging asset classes and different contract types. 

 

For H1, Clas posted a S$0.0278 distribution per stapled security, up from S$0.0233 in the year-ago period. Total distribution grew 26 per cent to S$96.3 million.

 

As at Jun 30, 80 per cent of the stapled group&rsquo s debts are on fixed rates and the weighted average debt to maturity is 3.6 years, mitigating the impact of rising interest rates, the managers said. 

 

Clas&rsquo gearing stood at 38.6 per cent with an effective borrowing cost of 2.3 per cent per annum, and an interest cover of 4.3 times.

 

Asia-Pacific&rsquo s largest lodging trust will see five of its properties undergo asset enhancement initiatives this year to uplift their value and profitability. 

 

Giving an update on Somerset Liang Court, an upcoming 192-unit serviced residence, Clas&rsquo managers said the development is expected to complete in the second half of 2025.

 

One of Clas&rsquo student accommodation properties in the US, Standard at Columbia, received its temporary certificate of occupancy on Jun 30. It will welcome its first batch of students in August. 

 

Teo added: &ldquo We will continue to exercise financial discipline as we seek investment, asset enhancement and portfolio reconstitution opportunities across our lodging asset classes.&rdquo

 

THE return to pre-pandemic levels of travel in the Asia-Pacific region will help CapitaLand Ascott Real Estate Investment Trust (CapitaLand Ascott Reit) boost revenue and deleverage, said credit rating agency Fitch.

 

In a report released on Thursday (May 18), the agency also upgraded the Reit&rsquo s long-term issuer default rating (IDR) to BBB, from BBB-, with a stable outlook. The Reit&rsquo s key markets are Australia, Japan and Singapore, and it focuses largely on the hospitality sector. 

 

The rating agency places the Reit&rsquo s peer, CDL Hospitality Trusts : J85 0%, two notches below (BB+/Stable) on account of the latter&rsquo s weaker business profile.

 

Mapletree Logistics Trust : M44U +0.6% is however rated a notch higher (BBB+/Stable) than CapitaLand Ascott Reit to reflect a better cash-flow visibility due to its portfolio diversification and larger scale.

 

In its report, Fitch said its rating upgrade on CapitaLand Ascott Reit reflects its &ldquo business recovery and sharp deleveraging in 2022&rdquo , which the agency expects to sustain into 2023 despite economic challenges in some markets. 

 

On the earnings front, it predicts that the Reit&rsquo s revenue per available unit will reach 90 per cent of pre-pandemic levels in 2023, and 95 per cent by 2024, up from around 80 per cent in 2022. It also predicts a total revenue growth of around 20 per cent in 2023.

 

This will be driven by the recovery in global travel, which will drive high room rates, as Fitch expects higher airline capacity in the next 12 to 18 months. Fitch forecasts that the Reit&rsquo s net debt will fall to 8.5 times its earnings before interest, taxes, depreciation and amortisation for 2023, which is well clear of the credit rating agency&rsquo s BBB rating threshold of 9.5 times. 

 

CapitaLand Ascott Reit, together with CapitaLand Ascott Business Trust, is traded as the stapled group CapitaLand Ascott Trust : HMN +1.92% (Clas). Fitch says that its rating is based on the consolidated profile of the two, since &ldquo there are strong operating and strategic linkages and complete cash fungibility between the two trusts, as provided by the stapling deed&rdquo .

 

Fitch&rsquo s IDR, however, relates only to the Reit, and not CapitaLand Ascott Business Trust.

CapitaLand Ascott Trust (CLAS) HMN 0.00% is remaining the top pick amongst analysts after the release of the trust&rsquo s business update for the 1QFY2023 ended March 31.

 

On April 26, CLAS announced that its 1QFY2023 gross profit rose by 59% y-o-y although no figures were released. The higher gross profit, which was also 97% of the trust&rsquo s pre-Covid-19 levels during the 1QFY2019, was due to a stronger operating performance and contributions from CLAS&rsquo s new properties during the quarter. Excluding its new properties, CLAS&rsquo s gross profit rose by 53% y-o-y.

 

CLAS&rsquo s revenue per available unit (RevPAU) spiked 90% y-o-y to $127 during the 1QFY2023, which stood at 93% of the trust&rsquo s pro forma RevPAU in the 1QFY2019.

 

PhillipCapital analyst Darren Chan has maintained his &ldquo buy&rdquo call with an unchanged target price of $1.26, noting positives such as CLAS&rsquo s RevPAU growth and its &ldquo resilient&rdquo extended stay segment.

 

While he observes that the trust&rsquo s interest expense increased during the quarter, CLAS remains his top pick within the hospitality sector for its geographically diversified portfolio.

 

CLAS&rsquo s wide range of lodging asset classes, stable income base which has proven its resilience through Covid-19, as well as its strong sponsor, is also among the reasons behind Chan&rsquo s pick.

 

&ldquo We also like CLAS for its balanced mix of stable and growth income sources, which is at 59% and 41% of gross profit in 1QFY2023 respectively. (Higher proportion of stable income in 1QFY2023 compared to 4QFY2022 mainly due to 1Q being a seasonally softer quarter for transient travel.),&rdquo he writes.

 

&ldquo The current share price implies a FY2023 dividend yield of 6%,&rdquo he adds.

 

In his outlook statement, Chan believes that CLAS&rsquo s forward bookings will remain healthy supported by the strong demand from both international and domestic travel, as well as robust activity from corporate travel and business activities.

 

&ldquo As of January 2023, global airlines are operating at only 11% of their 2019 capacity levels to and from China. This is expected to increase to 25% by April 2023. China is a key source market for travellers to many countries, and the return of flight capacity is expected to drive outbound travel. In 2019, Chinese travellers accounted for approximately 9% of CLAS' s guest count (about 4% in 1QFY2023) and we think this percentage will increase in the second half of 2023,&rdquo he notes.

 

That said, the analyst is expecting CLAS&rsquo s growth in its average daily rates (ADRs) to moderate as it has already surpassed its pre-pandemic levels in some markets. He adds that the driver for its RevPAU growth going forward will come from high occupancy rates.

 

&ldquo CLAS&rsquo s revenue growth has outpaced the increase in operating costs - electricity costs have increased, but it remains less than 10% of [its] operating expenses (opex),&rdquo he says.

 

CGS-CIMB Research analysts Natalie Ong and Lock Mun Yee have also kept their &ldquo add&rdquo call with an unchanged target price of $1.27.

 

Like PhillipCapital&rsquo s Chan, Ong and Lock like CLAS, putting it as their &ldquo top pick&rdquo within the hospitality sector.

 

&ldquo [CLAS&rsquo s] balanced portfolio provides stability and upside exposure to the hospitality market,&rdquo they explain.

 

They also remain optimistic in their outlook for the hospitality sector on the whole with international flights out of China remaining below 20% of their pre-Covid-19 levels in 1QFY2023. China is one of the trust&rsquo s largest source markets, the analysts note.

 

&ldquo As airline volumes recover, we expect future RevPAU growth to be driven by recovery in portfolio occupancy. While corporates may be tightening corporate budgets, given that CLAS&rsquo s serviced residences and (business) hotels are in the mid -tier segment, the management thinks their assets may see more demand as corporates select mass market over upscale and luxury tiered accommodation,&rdquo the analysts write.

 

To them, accretive acquisitions and divestments as well as a faster recovery from the impact of the pandemic are re-rating catalysts while lower-than-expected demand in leisure and corporate travel as well as a reimposition of lockdowns are downside risks.

 

CAPITALAND Ascott Trust : HMN +3.74% (Clas) on Monday (Jan 30) reported a 47 per cent increase in distribution per stapled security (DPS) to S$0.0333 for the half year ended Dec 31, 2022, from S$0.0227 the previous year.

 

Including adjustments for one-off items as well as a divestment gain of S$25 million, the adjusted DPS would have near-doubled to S$0.03 from S$0.0151 in H2 FY2021.

 

Revenue for the half year was up 69 per cent to S$353.8 million, from S$209.4 million a year ago.

 

The strong performance was attributed to higher portfolio revenue per available unit growth and accretive acquisitions.

 

The total distributable income rose 54 per cent year on year to S$113.2 million for H2 2022, from S$73.5 million in H2 2021. It includes a realised exchange gain arising from repayment of foreign currency bank loans, as well as the one-off distribution of the S$25 million divestment gain.

 

The distribution will be paid out on Mar 1, after book closure on Feb 7.

 

Full-year DPS stood at S$0.0567, up 31 per cent from S$0.0432 in FY2022. Including adjusted one-off items, FY2022 DPS would have been S$0.0479, up 106 per cent from S$0.0232 in FY2021. 

 

Meanwhile, revenue for the year stood at S$621.2 million, while total distributable income was S$189.8 million.

 

Portfolio revenue per available unit rose by 81 per cent to S$143 for H2 2022, up from S$79 in H2 2021, due to international travel recovery.

 

In the past year, Clas invested S$420 million in 15 accretive acquisitions, predominantly in the longer-stay segment. On a same-store basis, gross profit for H2 2022 increased by 67 per cent, compared with H2 2021.

 

Key markets in Clas&rsquo portfolio achieved a gross fair valuation gain of S$200 million.

 

The trust&rsquo s managers also reported a rise of 80 per cent in gross profit for the half year, up to S$164.6 million from S$91.2 million in the same period the year before.

 

The majority of Clas&rsquo debt due in 2022 has been refinanced, and its gearing stood at 38 per cent as at Dec 31. It also increased its proportion of debt on fixed rates to 78 per cent, which will help to mitigate the effects of a high interest rate environment.

 

Clas expects to benefit from the reopening of more countries and rising travel demand.

 

&ldquo We remain prudent in our capital management approach as we seek opportunities to reconstitute our portfolio,&rdquo said Serena Teo, chief executive of Clas&rsquo managers.

The managers of CapitaLand Ascott Trust (CLAS) have reported a distribution per stapled security (DPS) of 3.33 cents for the 2HFY2022 ended Dec 31, 2022. The DPU for the second half of the FY stood 47% higher than 2HFY2021&rsquo s DPS of 2.27 cents.

 

For the FY2022, CLAS&rsquo s DPS increased by 31% y-o-y to 5.67 cents, up from FY2021&rsquo s DPS of 4.32 cents.

 

Excluding one-off items, which include the divestment gain of $45 million distributed in the FY2021, the adjusted DPS for the FY2022 rose by 106% y-o-y to 4.79 cents.

 

During the 2HFY2022, CLAS&rsquo s revenue grew by 69% y-o-y to $353.8 million due to an increase in revenue from the trust&rsquo s existing portfolio and contributions from its expanded portfolio of longer-stay assets.

 

Gross profit surged by 80% y-o-y to $164.6 million. This comprised the profits from the trust&rsquo s properties on master leases, properties on management contracts with minimum guaranteed income and properties on management contracts.

 

On a same store basis, revenue and gross profit for the 2HFY2022 increased by 58% and 67% respectively.

 

As a result of the growth in revenue and gross profit, CLAS&rsquo s total distribution for the 2HFY2022 increased by 54% y-o-y to $113.2 million.

 

During the six-month period, CLAS reported revenue per available unit (RevPAU) of $143, up by 81% y-o-y, as it continued to achieve strong operating performance on the back of the return of international travel.

 

RevPAU for the 4QFY2022 rose by 78% y-o-oy to $155. The quarter&rsquo s RevPAU reached CLAS&rsquo s pre-pandemic levels in line with its 4QFY2019 pro forma RevPAU, which includes the performance of Ascendas Hospitality Trust&rsquo s (A-HTRUST) portfolio.

 

All of CLAS&rsquo key markets registered q-o-q RevPAU growth, with the biggest sequential improvements coming from Japan, Australia and the USA. CLAS&rsquo s portfolios in Singapore, Australia, the UK and the US performed at pre-Covid RevPAU levels.

 

CLAS&rsquo s occupancy rate for the 4QFY2022 stood at 78%. As at Dec 31, 2022, CLAS&rsquo s student accommodation and rental housing properties recorded an average occupancy rate of over 95%.

 

In the FY2022, CLAS&rsquo s revenue grew by 58% y-o-y to $621.2 million due to the higher revenue from its existing portfolio and additional contributions from the properties acquired during the year. This was partly offset by the lower revenue from the divestments in the FY2021.

 

Gross profit increased by 63% y-o-y to $282.8 million mainly from the higher revenue

 

Total distribution for the year increased by 38% y-o-y to $189.8 million.

 

RevPAU for the FY2022 increased by 74% y-o-y to $120.

 

As at Dec 31, 2022, CLAS recorded a gross fair value gain of about $200 million on the value of its portfolio due to stronger operating performance and improving outlook for its properties. The trust&rsquo s key markets with valuation gains include Australia, Singapore, the UK and the US.

 

Cash and cash equivalents as at Dec 31, 2022, stood at $298.9 million.

 

&ldquo CLAS&rsquo s robust performance is underpinned by our diversified and well-balanced portfolio. Growth income contribution increased to 48% in 2HFY2022 as our properties saw an upswing in demand with the recovery in the hospitality sector post Covid-19, while our stable income streams offered resilience against downside risks,&rdquo says Bob Tan, chairman of the managers.

 

&ldquo To further enhance our stable income portfolio, CLAS invested $420 million in 15 accretive acquisitions in FY2022, predominantly in the longer-stay segment,&rdquo he adds.

 

Serena Teo, CEO of the managers says they are &ldquo cautiously optimistic&rdquo of the hospitality industry&rsquo s continued recovery.

 

&ldquo We expect CLAS to continue to benefit from the reopening of more destinations and the pent-up demand for travel. In the coming year, we will be carrying out asset enhancement initiatives (AEI) for four properties in Singapore, France, Germany and UK. The AEIs will uplift the value and profitability of these properties and further enhance our income streams,&rdquo she says.

 

&ldquo We remain prudent in our capital management approach as we seek opportunities to reconstitute our portfolio. Our latest acquisition of a rental housing property in Fukuoka will enhance CLAS&rsquo s income resilience. It is situated in one of the fastest growing cities in Japan and our existing rental housing properties in Fukuoka have performed well,&rdquo she adds.

 

The DPS will be paid out on March 1.

THE managers of CapitaLand Ascott Real Estate Investment Trust (CapitaLand Ascott Reit) and CapitaLand Ascott Business Trust said on Friday (Nov 18) that Ascott Reit MTN &ndash a wholly-owned subsidiary of the trustee of CapitaLand Ascott Reit &ndash has issued S$165 million of 5 per cent notes due May 18, 2026.

 

The notes are issued under its S$2 billion multicurrency debt issuance programme established in September 2009 and amended in July 2020. The payment obligations of Ascott Reit under the notes will be unconditionally and irrevocably guaranteed by DBS Trustee, in its capacity as trustee of CapitaLand Ascott Reit.

 

The net proceeds arising from the issue of the notes will be used for refinancing the existing borrowings of CapitaLand Ascott Reit and its subsidiaries.

 

Ascott Reit MTN has entered into swap transactions to swap the Singapore dollar-denominated coupon payments of the notes into Japanese yen at a fixed interest rate of 1.06 per cent per annum.

 

CapitaLand Ascott Reit and CapitaLand Ascott Business Trust make up stapled group CapitaLand Ascott Trust (Clas).

CAPITALAND Ascott Trust (Clas) on Friday (Oct 29) reported an 88 per cent increase in RevPAU (portfolio revenue per available unit) to S$132 due to higher occupancy and average daily rates. 

 

Gross profits for Clas rose up to 90 per cent of third-quarter 2019 pro forma levels on higher contribution from growth income sources, which comprised of management contracts of serviced residences and hotels. 

 

The higher contribution was due to stronger performance across most markets. In terms of country performance, China and Singapore recorded the strongest quarter on quarter growth of 28 per cent and 27 per cent respectively, while Australia and the US continued to perform close to pre-Covid levels.

 

Stable income sources include those from master leases, longer-stay properties, and management contracts with minimum guaranteed income contributed 56 per cent of Q3&rsquo s gross profit.

 

Majority of Clas&rsquo debt due in 2022 has been refinanced, and its gearing stood at 35.8 per cent as at Sep 30, 2022. It also has a high proportion of debt effectively on fixed rates &ndash locked in for a weighted average of 3.5 years &ndash which will help to mitigate the effects of a high interest rate environment, according to Clas&rsquo report.

 

Looking ahead, Clas expects to benefit from the improving outlook for travel as well as greater demand for accommodation, with forward bookings for leisure travel remaining robust. It also noted a surge in travel bookings for its key market Japan, which has fully reopened to foreign travellers.

 

Moving forward, Clas will &ldquo exercise financial discipline in its investment and portfolio reconstitution plans&rdquo to adapt to macroeconomic headwinds including recession concerns and rising interest rates.

 

An advanced distribution per stapled security (DPS) of S$0.01078 was paid out on Oct 18. The next distribution will comprise Clas&rsquo distribution income for the period from Aug 24 to Dec 31 and semi-annual distributions will resume thereafter. 

 

LATEST Global Real Estate Sustainability Benchmark (GRESB) rankings released on Tuesday (Oct 18) showed that CapitaLand Ascott Trust (Clas) continued to hold pole position as the global sector leader for hotels for the second time running.

 

Meanwhile, Frasers Property Group&rsquo s Frasers Property Industrial, Lendlease Global Commercial Reit and Suntec Reit were termed regional leaders for their respective categories &ndash industrial, retail and office.

 

The GRESB rankings recognise real estate and infrastructure companies, funds and assets that have demonstrated outstanding leadership in sustainability each year. 

 

Apart from pitching companies against one another, GRESB also rates companies on how well ESG (environmental, social and governance) issues are integrated into the management and practices of companies and funds. 

 

This rating &ndash which gives five stars to the top 20 per cent of the benchmark globally &ndash is generally used to gauge a company&rsquo s or fund&rsquo s ability to obtain interest rate savings from their sustainability-linked loans and bonds.

 

CapitaLand Investment (CLI), in a statement on Tuesday, confirmed that the GRESB performance of the company, CapitaLand Integrated Commercial Trust (CICT) and Clas meant that they &ldquo will obtain interest rate savings&rdquo . While CLI and CICT did not feature as a global or regional leader, they both maintained the highest five-star rating, the company said.

 

To date, CLI and its listed real estate investment trusts and business trusts have partnered 17 financial institutions to secure a total of S$10.9 billion in sustainable finance comprising sustainability-linked loans and bond, green loans, green bonds and perpetual securities.

 

This year alone, the amount secured through 18 sustainable financing instruments came up to S$4 billion, CLI stated. Of the S$4 billion, S$1.3 billion, from seven sustainability-linked loans, are pegged to their GRESB performance.

 

CLI&rsquo s chief sustainability officer Vinamra Srivastava said the interest rate savings will be channelled to fund the company&rsquo s decarbonisation initiatives and innovations, accelerating its transition to a greener future. 

 

&ldquo Leveraging technology to increase efficiency in energy and water can yield tangible financial results and is a key lever in our carbon mitigation hierarchy,&rdquo he added. 

 

Srivastava also said CLI will continue to expand its global network of capital partners to step up its sustainable financing. 

 

Its competitor Frasers Property, separately, announced that Frasers Centrepoint Trust, Frasers Logistics & Commercial Trust, Frasers Property Australia, and Frasers Property Industrial (Australia) managed to retain five-star ratings for their respective portfolio of existing assets in the standing investments category.

 

In the development projects category, Frasers Property Holdings (Thailand) and Frasers Property Vietnam also posted remarkable improvements &ndash with both recording a jump of over 10 points in its scores compared to its 2021&rsquo s results, it also said.

 

Frasers Property&rsquo s group chief corporate officer Chia Khong Shoong said the performance is &ldquo further affirmation&rdquo of the group&rsquo s comprehensive sustainability efforts across its entities. 

 

&ldquo The annual rankings are useful to benchmark ourselves in our relevant markets and sectors. There is a growing need for transparency in disclosure and reporting consistency, thus having all business entities participate together helps provide greater accountability to stakeholders,&rdquo he said.

 

Lendlease, meanwhile, highlighted that two of the funds it manages in Asia &ndash Asia Retail Investment Fund 3 and Lendlease Jem Partners &ndash clinched regional sector leader status in the Asia Retail (Non-Listed) category.

 

It also noted that Lendlease Global Commercial Reit has emerged as regional sector leader in Asia Retail across listed and non-listed entities for a third consecutive year.

 

Lendlease&rsquo s chief executive officer for Asia Justin Gabbani said the company will continue to target some of the most ambitious accreditations on its upcoming developments in Asia to further raise the bar.

 

These developments refer to the redevelopment of Singtel&rsquo s Comcentre, Certis&rsquo headquarter, and the new Shaw Tower. They will be gunning for the Building and Construction Authority&rsquo s Green Mark Platinum (Zero Energy) and Green Mark Platinum (Super Low Energy) accolades, as well as Well Platinum, issued by the International Well Building Institute, Lendlease said in a statement.

 

THE recent proposed acquisition of 9 overseas properties is expected to raise the Ascott Residence Trust : HMN +0.88% (ART)&lsquo s distribution per share (DPS) by 1.1 per cent to 5.9 per cent from FY2022 to FY2024, if it goes through.

 

Given the trust&rsquo s pre-emptive external finance ratio, low cost of borrowing at 1.7 per cent and a comfortable gearing of 37.8 per cent, CGS-CIMB analyst Lock Mun Yee believes there may be further acquisitions in future.

 

In her report on Wednesday (Aug 17), Lock raised her target price on the hospitality reit to S$1.25 while keeping an &ldquo add&rdquo call as she believes the trust is likely to benefit from an increasing income resilience.

 

She noted that about 92 per cent of the acquisition portfolio&rsquo s gross income comes from stable sources stemming from the extended-stay assets &mdash such as the 5 Japan rental housing assets and the US student accomodation asset which have average length of stays of 2 and 1 year respectively &mdash as well as the master-leased serviced residences in France and Australia.

 

&ldquo This increases ART&rsquo s stable income from 69 to 71 per cent of gross profit and long-stay asset under management from 17 to 19 per cent post-acquisition, bringing it closer to its medium term asset under management target allocation of 25 to 30 per cent for extended-stay assets,&rdquo she said.

 

While an accretive acquisition and a quick recovery from Covid-19 could add to upside potential for the Reit, Lock thinks investors should also be wary of downside risks from a slower-than-forecasted recovery.

Ascott Residence Trust (ART) on Monday (Aug 15) proposed the acquisition of nine properties from its sponsor, The Ascott Limited, at an estimated total capitalised cost of $318.3 million.

 

The acquisition is expected to strengthen ART' s presence in its existing markets, the stapled hospitality group' s managers said in bourse filings before the market opened.

 

The assets - serviced residences, rental housing and student accommodation - are predominantly located in the Asia-Pacific region, with seven of the assets in Australia, Japan and Vietnam, and two in France and the United States.

 

The acquisition will increase ART' s distribution by $9.2 million and its pro forma financial year 2021 distribution per stapled security by 2.8 per cent.

 

The trust also launched a private placement on Monday to raise $150 million, with the offer of new stapled securities to be made to eligible institutional, accredited and other investors. The issue price will range between $1.11 and $1.14 per new stapled security, representing a 2.8 per cent to 5.4 per cent discount to ART' s $1.1733 volume-weighted average price.

 

ART will tap $122.3 million of the placement proceeds to partly fund the $215.2 million consideration for the properties. Another $25.3 million from the placement will partly fund any future potential acquisitions, while $2.4 million will be spent on professional and other expenses.

 

The acquisition of the nine assets is expected to be completed by November, subject to security holders' approval at an extraordinary general meeting to be held on Sept 9.

 

Three of the assets are serviced residences - Quest Cannon Hill in Brisbane, Australia, and La Clef Tour Eiffel Paris in France, which are on master leases and Somerset Central TD Hai Phong City in Vietnam. The latter caters mainly to corporate guests and has an average length of stay of about 11 months.

 

La Clef Tour Eiffel Paris has an occupancy rate of 80 per cent, while those of Quest Cannon Hill and Somerset Central TD Hai Phong City stand at 95 per cent and over 90 per cent respectively.

 

ART also plans to buy five rental housing properties in Japan that have lease tenures of about two years. They are located in Kyoto, Osaka, Hyogo and Nagoya.

 

Over in the United States, ART is doubling its stake in Standard at Columbia, acquiring an additional 45 per cent stake in the student accommodation property. Currently under development, Standard at Columbia is slated for completion in the second quarter of 2023.

 

" The addition of the five rental housing properties in Japan and a student accommodation property in the US will increase the proportion of our longer-stay portfolio from 17 per cent to 19 per cent of ART' s total portfolio value. This will bring us closer to our target of 25 per cent to 30 per cent for longer-stay assets in the medium term," said Ms Serena Teo, chief executive of ART' s managers.

 

The nine assets, totalling 1,018 units, will grow ART' s total assets to $8.3 billion as at end-2021 on a pro forma basis. Post-acquisition, ART will have a gearing of 38.5 per cent.

 

Some 92 per cent of the nine assets' gross profit is from stable income sources, which include master leases, management contracts with minimum guaranteed income and management contracts of rental housing and student accommodation. This will raise ART' s total proportion of stable income from 69 per cent to 71 per cent of its gross profit.

The return of global travel has lifted the fortunes of Ascott Residence Trust (ART), as it recorded a 14 per cent rise in distribution per stapled security (DPS) to 2.33 cents for the first half ended June.

 

Revenue for the period rose 45 per cent year on year to $267.4 million, translating to a 44 per cent increase in gross profit to $118.2 million. This was driven by a higher average daily rate and average occupancy rate, with the latter rising to 70 per cent in the second quarter, from 50 per cent in the previous quarter. Revenue per available unit also saw a strong 60 per cent increase to $96.

 

ART enjoyed greater contributions from its expanded portfolio of longer-stay assets, comprising student accommodation and rental housing properties, and the newly opened lyf property at one-north.

 

Its seven student accommodation properties in the United States and three rental housing properties in Japan acquired over the last year have an average occupancy rate of more than 95 per cent.

 

Some 32 per cent of ART' s first-half gross profit was income from management contracts of serviced residences and hotels. The remainder came from " stable income" sources, including master leases, management contracts with minimum guaranteed income, rental housing and student accommodation properties

 

The trust' s distributions in the first half were up 20 per cent to $76.7 million, including realised exchange gains from repaying foreign currency bank loans. Excluding one-off items, ART' s adjusted DPS rose 120 per cent to 1.78 cents.

 

Mr Bob Tan, chairman of ART' s two managers, said that its serviced residences and hotels have contributed more growth income with the recovery in travel.

 

" This builds upon the steady income stream from our strong foundation of longer-stay assets. ART' s diversified and resilient portfolio remains poised for further growth.

 

" In addition, our robust financial position gives us the capacity to achieve our asset allocation target of 25 per cent to 30 per cent in longer-stay assets and 70 per cent to 75 per cent of our portfolio in serviced residences and hotels," he said.

 

Looking ahead, ART has two properties under development. The student accommodation, Standard at Columbia, in the US is expected to be completed in the second quarter of 2023. Construction of the new Somerset serviced residence at the Liang Court site remains on track for completion in the second half of 2025.

BEH Siew Kim, chief executive and executive director of the managers of Ascott Residence Trust : HMN 0% (ART), will relinquish her position from Jul 1 (Friday) to assume another senior management role within CapitaLand Investment : 9CI -1.29% or its subsidiaries. 

 

She will be replaced as chief executive by Serena Teo Joo Ling, who will also be appointed executive director and a member of the executive committee. She was deputy chief executive of the managers of ART in November 2021.

 

This is part of the regular leadership renewal process of the managers &ndash Ascott Residence Trust Management and Ascott Business Trust Management &ndash ART said in a Thursday (Jun 30) bourse filing.

 

Beh will also be redesignated as a non-executive, non-independent director of ART&rsquo s managers, taking over from Andrew Geoffrey Lim Cho Pin, who steps down on Jul 1.

 

Beh will remain a member of the executive committee. Appointed to her role at ART&rsquo s managers in 2017, she was responsible for strategic planning and the business, operational and investment strategies of the stapled hospitality group.

 

MOODY' S Investors Service has changed its outlook on Ascott Residence Trust : HMN -1.75% (ART) and Frasers Hospitality Trust : ACV -7.03% (FHT) to &ldquo stable&rdquo from &ldquo negative&rdquo while affirming its Baa3 rating for both trusts.

 

The credit rating agency expects both ART and FHT to benefit from the resumption of leisure and business travel, as movement restrictions ease and borders open across most countries.

 

In a report released on Thursday (May 12), Moody&rsquo s analyst Tay Yu Sheng said its change in outlook for FHT to &ldquo stable&rdquo reflects an improvement in the hospitality trust&rsquo s liquidity, Tay also expects FHT&rsquo s credit metrics to improve in the next 18 months, supported by a recovery in operating performance and recent asset divestment.

 

The outlook change for ART meanwhile, incorporates Moody&rsquo s expectation that the real estate investment trust (Reit) will remain financially prudent when executing its planned investments in longer-stay accommodation. Doing so will allow it to improve earnings diversification and buffer against the volatile hospitality sector, Tay added.

 

&ldquo Rental housing and student accommodation typically have 1-2 years of average stay compared with much shorter tenures in the hotel and serviced residence portfolios. At the same time, demand for longer-stay accommodation remained resilient during the pandemic, with occupancy rates of more than 90 per cent in 2021,&rdquo Moody&rsquo s noted.

 

ART&rsquo s Baa3 rating remains supported by its &ldquo good scale and portfolio of quality assets&rdquo , with 95 properties located mainly in key gateway cities across 15 countries as at Mar 31, 2022.

 

The Reit also benefits from revenue visibility under its master leases and management contracts with minimum guaranteed income, Moody&rsquo s added. These arrangements contain mechanisms providing fixed income that protects against volatility in the hospitality sector and helped cushion disruptions caused by the Covid-19 pandemic.

 

As for FHT, Moody&rsquo s Baa3 rating is supported by the stapled group&rsquo s portfolio of 14 hospitality properties, which are geographically diversified across 6 countries and largely unencumbered. The trust is also &ldquo well-positioned&rdquo to capture travel recovery as its assets are strategically located in the prime areas of their respective cities.

 

Furthermore, FHT benefits from partial revenue visibility and downside protection under its long-term master lease agreements &ndash which comprise fixed and variable components. This means the trust is able to receive minimum rental income regardless of the property' s performance.

 

That being said, Moody&rsquo s holds the view that FHT&rsquo s rating remains constrained by its small asset size and significant tenant concentration risk as 12 of its 14 master lease agreements are with its sponsor Frasers Property.

 

FHT&rsquo s property portfolio was also valued at less than S$2 billion as at Mar 31, small relative to its global peers, Moody&rsquo s said.

CapitaLand Investment&rsquo s (CLI) wholly-owned lodging business unit, The Ascott has set a target to sign 150 properties with over 30,000 units under its lyf co-living brand by 2030.

 

Ascott currently has 17 lyf co-living properties with over 3,200 units in 14 cities and nine countries.

 

This year, The Ascott plans to open five more lyf properties in cities: Bangkok, Cebu, Kuala Lumpur, Melbourne and Xi&rsquo an. Come 2025, another five are slated to open in Beijing, Danang, Ho Chi Minh City, Manila and Paris.

 

The Ascott, on April 11, officially opened the 324-unit lyf one-north Singapore and is designed to meet the co-living needs of people working in start-ups and research institutes in the vicinity.

 

The property is held by Ascott Residence Trust, which is sponsored by The Ascott.