CapitaLand Ascott Trust first-half distribution per stapled security falls 8%

SINGAPORE – CapitaLand Ascott Trust (Clas) posted an 8 per cent drop in distribution per stapled security (DPS) to 2.55 cents for the first half ended June 30, from 2.78 cents in the year-ago period.

The managers on July 26 attributed this decline mainly to the depreciation of foreign currencies against the Singapore dollar.

DPS inched down by 1 per cent year on year at 2.41 cents, after excluding non-periodic items related to realised exchange gain from the settlement of cross currency interest rate swaps.

Revenue for the half-year period stood at $386.4 million, up 11 per cent from the $346.9 million in the same period in the year before.

Its gross profit rose 12 per cent to $172.9 million from $154.4 million.

The managers attributed the increase in revenue and gross profit to higher revenue of $11.8 million from its existing portfolio and $38.2 million in additional contributions from acquisitions. 

This was partially offset by a drop in revenue from the divestment of a hotel in Australia, three properties in Japan and a serviced residence property in Singapore in the first quarter of 2024.

The stapled group acquired three turnkey rental housing properties in Japan; three properties in Indonesia, Ireland and Britain combined, as well as one student housing asset in the US. 

Ms Serena Teo, chief executive officer of Clas’ managers, said: “Part of the divestment proceeds has also been used to pare down higher-interest debt, keeping our gearing healthy at 37.2 per cent and delivering accretion as we evaluate opportunities to redeploy the capital.”

Mr Lui Chong Chee, chairman of Clas Management and CapitaLand Ascott Business Trust Management, said the stapled group divested of its mature assets, worth $408.1 million, at a premium to book value.

“We will unlock about $44.6 million in gains, at an average exit yield of about 3.8 per cent,” he noted. “This strengthens our financial capacity to redeploy capital towards optimal and accretive uses.”

Clas said its portfolio reconstitution strategy – including acquisitions, divestments and ongoing asset enhancement initiatives (AEIs) – is still under way. It added that the AEIs, when completed, are expected to lift its distribution income.

The stapled group’s H1 total distribution inched up slightly to $96.5 million from $96.3 million in the same period in the previous year. The distribution will be paid out on Aug 29, after the record date on Aug 5.

For H1 2024, Clas recorded a 5 per cent increase in revenue per available unit (RevPau) of $145. On a quarterly basis, RevPau for the second quarter of 2024 rose 4 per cent to $155, reaching 102 per cent of the pre-pandemic levels of Q2 2019, on a pro-forma basis. 

The increase in RevPau is linked to higher room rates, led by Japan and the US. 

RevPau of its Japan properties rose 30 per cent in H1 2024, driven by higher leisure demand from tourists and the cherry blossom season.

RevPau for its US properties grew by 3 per cent due to higher corporate and leisure demand.

Clas’ gearing stood at 37.2 per cent as at June 30, with a debt headroom of about $1.2 billion. The stapled group’s total debt on fixed rates stands at 82 per cent and it has some $1.29 billion in cash and available credit facilities.

Its average cost of debt stood at 3 per cent per annum as at end June, and the managers expect this to remain stable until the end of the year. This is because about 82 per cent of Clas’ debt is on fixed rates and the weighted average debt to maturity is 3.6 years.

Looking ahead, the managers said Clas is expected to remain resilient as its geographic diversification, lodging asset classes and different contract types provide a balance and stable growth income.

Ms Teo expects that regular travel patterns and seasonality could return in more markets as pent-up demand moderates. “Clas maintains a cautiously positive view on the demand for lodging,” she added.

Stapled securities of Clas closed unchanged at $0.90 on July 26.

THE BUSINESS TIMES