OPERATIONS REVIEW GROSS RENTAL INCOME (GBP’000) FY 2023 FY 2022 Citadines Barbican London 6,343 5,652 Citadines Holborn-Covent Garden London 9,576 8,569 Citadines South Kensington London 5,409 4,697 Citadines Trafalgar Square London 14,029 11,186 The Cavendish Londoni 1,459 - REVENUE PER AVAILABLE UNIT (GBP) FY 2023 FY 2022 Citadines Barbican London 132 117 Citadines Holborn-Covent Garden London 132 118 Citadines South Kensington London 155 133 Citadines Trafalgar Square London 199 157 The Cavendish Londoni 201 - i The acquisition of the property was completed on 30 November 2023; hence the gross rental income and RevPAU stated for FY 2023 are for December 2023. boosting demand for accommodation. The Centre for Economics and Business Research estimated a GBP337 million boost from extra tourism and spending over the three-day weekend5. The RevPAU of CLAS’ UK properties remained above pre-COVID-19 levels throughout FY 2023. For the full year, RevPAU surged 20% YoY in GBP terms. On a same-store basis6, RevPAU of CLAS’ UK properties increased 18% YoY, and was 13% above pre-pandemic levels. 2024 OUTLOOK The UK economy is forecasted to expand by 0.6% YoY in 20247, as the lagged negative effects of high energy prices wane. As the UK enters an election year in 2024, markets are expecting the Bank of England to start cutting interest rates from as early as the summer, given cooling inflation and softer economic growth8. In 2024, an increase in inbound visits and spending by overseas visitors in the UK is expected3. It is forecasted that there will be 39.5 million inbound visits to the UK, up 5% YoY and 3% below 2019 levels. Tourist spending is projected to hit GBP34.1 billion, a 7% increase YoY and a 20% increase from 2019 levels3. However, a slowdown in the overall pace of recovery compared to the strong start seen in the first half of 2023 has been observed, in addition to competition from other European countries3. 2024 could be the first post-COVID-19 year that sees occupancy rates in the UK surpass 2019 levels. Inbound tourism stays are expected to sustain its growth in 2024, particularly in London, which will continue to cement the city’s reputation as a global destination for business, entertainment and events. As international visitor numbers are projected to increase and as operational costs rise with inflation, market ADR and RevPAR are expected to remain high in 20249. The outlook for CLAS’ UK portfolio is positive, with demand expected across all segments. As the properties are under MCMGI, they will be able to benefit from the continued momentum expected in 2024, while the minimum guaranteed income offers protection against downside risks. Corporate and group stays will continue to provide a stable base at CLAS’ UK properties, mitigating some impact from the refurbishment at Citadines Holborn-Covent Garden London which is expected to be completed in 3Q 2024. In addition to Citadines Holborn-Covent Garden London, The Cavendish London is also slated for renovation. It will be renovated and rebranded under The Crest Collection, a luxury brand managed by The Ascott Limited, which is expected to enhance its EBITDA yield to approximately 6.5% on a post-renovation stabilised basis10. The valuation of the property is expected to be GBP316.0 million post-renovation and stabilisation in 202711, an increase of GBP97.0 million compared to its valuation of GBP219.0 million as at 31 December 2023. 4 Source: Travelport (2023) 5 Source: Centre for Economics and Business Research (2023) 6 Excluding The Cavendish London which was acquired in November 2023. 7 Source: International Monetary Fund (2024) 8 Source: The Guardian (2023) 9 Source: CBRE (2024) 10 Based on stabilised EBITDA before furniture, fixtures and equipment reserves in year 2027/28 over The Cavendish London’s agreed property value, estimated capitalised costs, and estimated proportion of project cost attributable to CLAS. Such EBITDA figures are from the HVS London valuation. 11 Based on the valuation by HVS London. 54 CAPITALAND ASCOTT TRUST
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