RECONSTITUTING OUR PORTFOLIO As part of CLAS’ active portfolio reconstitution strategy, we proactively pursue investment, divestment and asset enhancement opportunities to enhance the quality of our portfolio and sustainability of returns to Stapled Securityholders. Accretive acquisitions and asset enhancement initiatives (AEIs) create value for CLAS and improve the returns to Stapled Securityholders. CLAS invests in properties with prime locations and strong demand drivers. CLAS also undertakes AEIs to enhance the yield and profitability of its assets. Divesting properties which have reached the optimal stage of their life cycle enables a more efficient use of capital, as the proceeds may be redeployed towards more optimal uses. This includes investing in higheryielding assets, funding AEIs that can generate stronger yields or paying down higher interest rate debt. DIVESTMENT In FY 2023, CLAS entered into agreements to divest nine properties for a total price of S$260.1 million at an average exit yield of 4.3%1. Four mature properties in regional France were divested for a total of EUR44.4 million (S$64.7 million), at 63% above book value and an exit yield of about 4%. The divestment was completed in September 2023. The other five properties comprise three hotels located in Osaka, Japan, and two hotels outside the city centre of Sydney, Australia. The three hotels in Japan were divested for a total price of JPY10.7 billion (S$99.8 million), a 15% premium over book value. The divestment was completed on 14 March 2024. The total sale price of the two hotels 1 The exit yield of the France and Australia properties is computed based on FY 2022 Earnings before Interest, Taxes, Depreciation and Amortisation (EBITDA). The exit yield for the Japan portfolio is not meaningful as the properties were largely closed in 2022. 2 Based on FY 2023 EBITDA. Divested S$260.1M in assets at average exit yield of 4.3% in FY 2023, recycling capital into more optimal uses in Australia was AUD109.0 million (S$95.6 million), 5% above the properties’ total book value, which represents an exit yield of about 4.4%. The divestment of one of the hotels, Courtyard by Marriott SydneyNorth Ryde, was completed on 31 January 2024 and the other, Novotel Sydney Parramatta, is expected to complete in 3Q 2024. In February 2024, CLAS announced the divestment of Citadines Mount Sophia Property Singapore for S$148.0 million, close to S$1.0 million a key. The sale price was 19% above the property’s book value, which represents an exit yield of about 3.2%2. The divestment was completed on 1 March 2024. Including Citadines Mount Sophia Property Singapore, the average exit yield of the 10 divestments was 3.8%. Divestment Investment Asset Enhancement Ascott Kuningan Jakarta, Indonesia Citadines Holborn-Covent Garden London, United Kingdom (artist's impression) 22 CAPITALAND ASCOTT TRUST
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