CapitaLand Ascott Trust (CLAS) has increased its distribution per Stapled Security (DPS) for FY 2023 by 16% year-on-year (y-o-y) to 6.57 cents. Despite the pandemic, its DPS has increased every year since FY 2020. Excluding one-off items, adjusted DPS for FY 2023 rose 14% y-o-y to 5.44 cents. Total distribution for FY 2023 rose 25% y-o-y to S$237.0 million. The rise was due to stronger operating performance and contributions from 18 new acquisitions. DPS for 2H 2023 was up 14% y-o-y to 3.80 cents and CLASâ€™ total distribution for 2H 2023 grew 24% y-o-y to S$140.8 million.
CLASâ€™ properties saw strong demand as international travel continued to recover. CLASâ€™ revenue per available unit (REVPAU) in 2H 2023 reached 103% of pre-pandemic levels in 2H 2019 on a pro forma basis, increasing by 10% y-o-y to S$157. REVPAU also rose 23% y-o-y to S$148 for FY 2023. In 4Q 2023, majority of CLASâ€™ key markets such as China, Japan, United States of America (USA) and Vietnam also registered y-o-y REVPAU growth.
CLASâ€™ gross profit for 2H 2023 rose 12% y-o-y to S$183.9 million compared to 2H 2022. This is 106% of pre-pandemic levels. Revenue for 2H 2023 also increased by 12% to S$397.6 million compared to 2H 2022. This was mainly attributed to higher revenue received from CLASâ€™ existing portfolio and contributions from its new acquisitions. On a same-store basis excluding the new acquisitions, gross profit and revenue increased by 5% and 8% respectively compared to 2H 2022. In 2H 2023, stable income sources contributed about 54% of CLASâ€™ gross profit, while the remaining 46% was generated from growth income sources.
CLAS achieved a fair value gain of S$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 United Kingdom.
Mr Bob Tan, Chairman of CapitaLand Ascott Trust Management Limited and CapitaLand Ascott Business Trust Management Pte. Ltd. (the Managers of CLAS), said: â€œCLAS continued to deliver strong performance. Our balanced portfolio of stable and growth income streams enables CLAS to capture growth opportunities while remaining resilient amidst uncertainties. As part of CLASâ€™ active portfolio reconstitution strategy, we completed 18 yield-accretive acquisitions in the past two years, boosting CLASâ€™ income. In the last seven months, we also announced the divestment of nine mature properties at a premium to book value. Our strengthened financial position will enable us to redeploy capital towards more optimal uses such as investments into higher-yielding assets, funding our asset enhancement initiatives (AEI) or paring down debt. We remain committed to delivering sustainable returns to Stapled Securityholders.â€
Ms Serena Teo, Chief Executive Officer of the Managers of CLAS, said: â€œThrough 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 CLASâ€™ portfolio across geographies, lodging asset classes and contract types will continue to provide income stability.â€
Delivering returns through CLASâ€™ active portfolio reconstitution strategy
CLAS has announced divestments of S$260.1 million of assets at a premium to book value in the last seven months. The divestment of nine assets will unlock S$24.3 million in net gains, at an average exit yield of about 4.3%. Other than deploying capital to higher-yielding assets or AEI, the divestments also boost CLASâ€™ financial flexibility, potentially enabling CLAS to strengthen its balance sheet and lower its gearing.
CLAS completed the S$530.8 million yield-accretive acquisition of three prime lodging properties in London, Dublin and Jakarta in November 2023, delivering EBITDA yield of 6.2% , about 1.9 percentage points higher than the average exit yield on its divestments. In January 2024, CLAS also 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.
Uplifting the value and profitability of CLASâ€™ portfolio through new developments and asset enhancement initiatives
Previously under development, Standard at Columbia in the USA, 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 2H 2025.
CLAS also announced AEI for eight properties to create additional tailwind beyond the travel recovery. Unlocking growth potential, the uplift in performance post renovation is expected to enhance the propertiesâ€™ profitability and valuation. Riverside Hotel Robertson Quay was rebranded and unveiled as The Robertson House by The Crest Collection in October 2023. The AEI is on track for full completion in 1Q 2024. AEI for the seven other properties are set to be completed between 2024 and 2026.
CLASâ€™ strong financial capacity and healthy liquidity position
CLAS is in a strong financial position and continues to be prudent in its capital management. Despite a high interest rate environment, CLASâ€™ average cost of debt remains low at 2.4% per annum as at 31 December 2023. CLAS increased its proportion of debt on fixed rates to 81% and has a total of approximately S$1.32 billion in cash on-hand and available credit facilities. CLASâ€™ interest rate cover is also healthy at 4 times. It has a debt headroom of about S$2 billion and a gearing of 37.9%, which is well below the 50% gearing limit allowable under the property funds appendix issued by the Monetary Authority of Singapore.