Q A Q&A IN CONVERSATION WITH CHAIRMAN & CEO We are guided by our medium-term asset allocation target, which is to have 25-30% of our total portfolio value in longer-stay properties, and the remaining 70-75% in hospitality assets, for a balanced mix of stable and growth income streams. CEO: In FY 2023, we divested four mature serviced residences in regional France for a total of EUR44.4 million (S$64.7 million) at 63% above book value. The proceeds from the divestment have been used for our AEIs in Europe, and to partially finance the acquisition in Dublin. Apart from the properties in France, we also announced the divestment of three properties in Osaka, Japan, for a total of JPY10.7 billion (S$99.8 million) at 15% above book value and two mature hotels in the outskirts of Sydney, Australia, for a total of AUD109.0 million (S$95.6 million) at 5% above book value. In February 2024, we announced the divestment of Citadines Mount Sophia Property Singapore, a serviced residence in Singapore, for S$148.0 million, close to S$1.0 million a key, and 19% above the property’s book value. The divestments in Japan, Australia and Singapore, which have, or are expected to be completed in 2024, offer us the flexibility to redeploy the proceeds into more optimal uses such as investing into higher-yielding assets and funding our AEIs. The divestments also enable us to strengthen our balance sheet and potentially lower gearing by close to 2 percentage points. On acquisitions, the three properties in London, Dublin and Jakarta were acquired at a combined agreed property value of S$530.8 million. The EBITDA yield of 6.2% translates into DPS accretion of 1.8%. The properties are well-located and primed to capture travel demand. The Cavendish London is situated in the exclusive Mayfair high-end shopping district of central London, and presents an excellent value-add opportunity for CLAS. The property will be renovated and rebranded under The Crest Collection brand, a luxury collection brand managed by Ascott, and AEI costs will be co-shared with the operator. Following the renovation and stabilisation of the property, the EBITDA yield of The Cavendish London is expected to increase to 6.5%, and its valuation is expected to be GBP316.0 million in 20274. This is an increase of GBP97.0 million from the valuation of GBP219.0 million as at 31 December 2023. The Temple Bar Hotel is in the Temple Bar district of Dublin, which is a high-traffic area near iconic attractions. Ascott Kuningan Jakarta is in the capital city’s central business district, close to embassies and commercial offices. What can investors look forward to in FY 2024? Chairman: We remain cautiously optimistic about the outlook for CLAS and will continue to be proactive in our portfolio management. The global economy is expected to grow 3.1% in 2024, maintaining the same pace of growth as in 20235. The resilience of the world’s major economies in conjunction with a fall in inflation has decreased the likelihood of a hard landing5. International visitor arrivals, which were at 88% of pre-pandemic levels in 2023, are projected to make a full recovery in 20246. China’s international air travel market is also expected to extend its recovery, with weekly flights projected to resume to 80% of pre-pandemic levels by the end of the year7. The anticipated increase in flight capacities and visitor arrivals bode well for CLAS. RevPAU growth, which may moderate after the strong rebound in FY 2023, is expected to be primarily driven by increased occupancies as average daily rates stabilise. To mitigate rising operating and financing costs, we remain disciplined in our cost and capital management. CEO: In FY 2023, we renewed the master leases for seven of our properties in France. Under the new rent structure, the fixed rent provides resilience while the variable rent enables us to capture the demand from increased travel. Five of the seven properties are in Paris, and are expected to enjoy an uplift from the Paris 2024 Summer Olympics. The total rent for the seven French master leases in FY 2024 is projected to be approximately 28% higher under the renewed master leases8. 4 Based on the valuation by HVS London. 5 Source: International Monetary Fund (2024) 6 Source: World Tourism Organization (2024) 7 Source: Civil Aviation Administration of China (2024) 8 Based on HVS’ lease benchmarking report. 10 CAPITALAND ASCOTT TRUST
RkJQdWJsaXNoZXIy NTkwNzg=