OPERATIONS REVIEW University of Pennsylvania and Drexel University as well as uCity Square, a life science and technology hub with retail, residential, clinical, office and laboratory space. Paloma West Midtown is a freehold property with 525 beds across 183 units located in the heart of Atlanta, Georgia. It is situated across the street from the Georgia Institute of Technology. Seven07 is a freehold property with 548 beds across 218 units located in the city of Champaign, Illinois, less than 200 metres away from the University of Illinois. Wildwood Lubbock is a resort-style freehold property with 1,005 beds across 294 units located in the city of Lubbock, Texas. It is situated 2.7 kilometres from the campus boundary of Texas Tech University. Standard at Columbia, CLAS’ newest student accommodation property, obtained its temporary certificate of occupancy on 30 June 2023 and received its first batch of students in August 2023. Located in Columbia, South Carolina, it is a freehold property consisting of 678 beds across 247 units. In 2021, CLAS and its Sponsor, Ascott, jointly invested in the development to own 45% stake each, with a third-party partner owning the remaining 10% stake. In November 2022, CLAS acquired Ascott’s 45% stake, doubling its ownership in Standard at Columbia to 90%. 2023 REVIEW In 2023, the USA economy grew by 2.5%, compared with a 1.9% growth in 20221. USA’s growth in 2023 was primarily fueled by an increase in consumer spending and a resilient labour market. Notwithstanding the growth in the economy, inflation pressures subsided. New York City’s tourism industry was a key driver for the state and city economy in 2023, generating about USD74 billion in economic impact2. The city attracted 61.8 million visitors in 2023, reaching 93% of the city’s pre-pandemic record visitation levels in 2019. It also remains the largest point of entry into the USA, with more than 2,900 weekly flight arrivals across its international airports, highlighting its key position as a worldwide tourist destination. New York City’s hotel performance remained strong in 2023, with an estimated 36.5 million room nights sold, about 92% of 2019 record levels. The city was also ranked the best-performing hotel city in the USA in the fourth quarter of 2023. City-wide, the demand for hotels remained high and was supported by a steady growth in midweek business travel. The limited supply of new hotel rooms in New York City was also a key factor which drove performance in 20233. CLAS’ USA hotels continued to perform well in FY 2023 as travel demand remained robust. Bookings from international guests increased as citywide activities returned and large-scale events such as the 78th session of the UN General Assembly provided a boost. In 1H 2023, CLAS’ USA hotels performed in line with pre-pandemic levels before RevPAU picked up to reach 115% of pre-pandemic levels in 4Q 2023. For FY 2023, RevPAU was 20% higher YoY, in USD terms. Similarly, CLAS’ USA student accommodation properties performed well. They are 93% leased for the 2023-2024 academic year (AY) beginning August 2023. Excluding Standard at Columbia which began receiving students in August 2023, rent growth is about 5.5% over the previous AY. Excluding Standard at Columbia and Wildwood Lubbock which was undergoing light AEI, rent growth is higher at about 6.5% over the previous AY. 2024 OUTLOOK The USA economy is projected to grow 2.1% in 20244. The slower pace of growth as compared to 2023 is mainly due to lagged effects of monetary policy tightening, gradual fiscal tightening, and a softening in labour markets. Amid the softer outlook of the overall USA economy, New York City’s economy is expected to be bolstered by resilient travel demand, as seen in 2023. Being the largest point of entry to the USA and a key destination of choice, the city is expected to attract 64.5 million visitors in 2024, an approximate increase of 4.4% YoY2. Ongoing projects contributing to this growth include multibillion-dollar improvements to the airports, both international and domestic, including the LaGuardia Airport which is slated for completion in 2024 after undergoing the first complete rebuild of a USA airport in over 25 years2. CLAS’ hotels, being well-located in bustling districts in New York City, are poised to benefit from the continued demand from both corporate and leisure travellers in 2024, with citywide large-scale events providing further uplift. The ongoing redevelopment of Hudson Square which has completed its first phase of projects in 2022 and entered its second phase5, is expected to benefit Sheraton Tribeca New York Hotel. With minimal direct 1 Source: Reuters (2024) 2 Source: New York City Tourism + Conventions (2023) 3 Source: PwC (2024) 4 Source: International Monetary Fund (2024) 5 Source: Hudson Square Business Improvement District (2024) 60 CAPITALAND ASCOTT TRUST
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