How did CapitaLand Ascott Trust perform in the financial year 2023 (FY 2023)? What were the tailwinds and headwinds? Chairman: CLAS delivered a strong performance in FY 2023, increasing Distribution per Stapled Security (DPS) by 16% year-on-year (YoY) to 6.57 Singapore cents. This is the third consecutive year we have increased DPS since FY 2020 despite the pandemic. Excluding one-off items1, our adjusted DPS was 14% higher YoY. The rise was due to our strong operating performance and acquisitions of quality assets that have contributed to our income. Our balanced portfolio of stable and growth income streams enables CLAS to capture growth opportunities while remaining resilient amidst uncertainties. Our serviced residences and hotels continued to benefit from the recovery of the hospitality sector as global flight capacities increased and demand for travel picked up. The increase in tourism as well as business activities and meetings, incentives, conventions and exhibitions (MICE), particularly in gateway cities, were key demand drivers for our properties. In the fourth quarter of 2023 (4Q 2023), CLAS’ portfolio Revenue per Available Unit (RevPAU) was at 103% of pre-pandemic levels. The average occupancy of our portfolio was 77%, and average daily rates were more than 10% above pre-pandemic levels. CLAS’ key markets, Australia, Japan, Singapore, United Kingdom and the United States of America continued to exceed pre-pandemic same-store levels. Japan posted the strongest YoY growth in RevPAU, fuelled by the reopening of its international borders in late-2022. The RevPAU of our properties in Vietnam and China continued to improve through FY 2023 to over 85% of pre-pandemic levels in 4Q 2023. The return of outbound travel from China was slower than expected, however, as flight capacities and sentiment towards international travel had not fully recovered. As we rode the tailwinds of the hospitality sector, CLAS’ diversified and well-balanced portfolio offered resilience amidst macroeconomic and geopolitical uncertainties and inflationary pressures. Q Q A A The 11 longer-stay properties (rental housing and student accommodation properties) we acquired in FY 2022 contributed to our stable income streams in FY 2023. Our serviced residences and longer-stay properties, which predominantly serve longstay guests, have leaner operating structures and lower manning requirements. In addition, we work with our operators on cost containment measures to manage our operating expenses. Our prudent capital management has also enabled CLAS to mitigate the impact of higher interest rates and foreign currency movements. With the stronger operating performance and contributions from new properties, CLAS’ growth in revenue was more than sufficient to mitigate the rise in operating and financing costs in FY 2023. The improvement in our operating performance and outlook also resulted in an increase of about 2% in CLAS’ portfolio valuation, notwithstanding higher capitalisation and discount rates across most markets. How does portfolio reconstitution enable CLAS to create greater value for Stapled Securityholders? Chairman: Through our active portfolio reconstitution strategy, we constantly monitor the growth potential of our properties and seek opportunities to enhance the quality of our portfolio to deliver sustainable returns to Stapled Securityholders. CLAS divests properties which have reached the optimal stage of their life cycle and recycles the proceeds into value-adding opportunities through accretive acquisitions, asset enhancement initiatives (AEIs) or new development projects. Over the past three years, we have divested properties at a premium to book value, unlocking gains for Stapled Securityholders, and the proceeds from the divestments have been successfully reinvested into higheryielding assets, improving the returns and resilience of CLAS’ portfolio. From July 2023 to February 2024, we entered into agreements to divest 10 properties for S$408.1 million, at an average exit yield of 3.8%2. The exit yield compares favourably to the EBITDA yield of 6.2%3 of the acquisitions we entered into in FY 2023. 1 Comprising realised exchange gain in FY 2022 and FY 2023. 2 Exit yield of the France and Australia properties is computed based on FY 2022 Earnings before Interest, Taxes, Depreciation and Amortisation (EBITDA), and the exit yield of the Singapore property is computed based on FY 2023 EBITDA. The exit yield for the Japan portfolio is not meaningful as the properties were largely closed in 2022. 3 The EBITDA yield of 6.2% is on a FY 2022 pro forma basis and based on agreed property value of the properties excluding the milestone payment and before AEIs, if any. Including the milestone payment, the EBITDA yield is 5.1%. ANNUAL REPORT 2023 9 Overview Leadership Portfolio & Performance Sustainability & Governance Financial Statements and Other Information
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