FINANCIAL REVIEW ASSETS CLAS’ total asset value stood at S$8.7 billion as at 31 December 2023, 9% higher as compared to S$8.0 billion as at 31 December 2022. The increase in total assets was mainly due to higher portfolio valuation resulting from stronger operating performance and improving outlook, notwithstanding higher capitalisation and discount rates across markets (except for Japan). CHANGE IN FAIR VALUE OF INVESTMENT PROPERTIES, LAND AND BUILDINGS, INVESTMENT PROPERTIES UNDER DEVELOPMENT AND ASSETS HELD FOR SALE The net change in fair value of investment properties, land and buildings, investment properties under development and assets held for sale has no impact on Stapled Securityholders’ distribution. In accordance with the Code on Collective Investment Schemes issued by the Monetary Authority of Singapore, valuation of CLAS’ properties is to be conducted once every year. Any increase or decrease in fair value is credited or charged to the Statement of Total Return as net appreciation or depreciation on revaluation of investment properties, land and buildings, investment properties under development and assets held for sale. As at 31 December 2023, independent full valuations were carried out by HVS (except for the three hotels in USA, the six hotels in Australia, the two hotels in South Korea and the eight student accommodation properties in USA). For the three hotels in USA and the six hotels in Australia, the valuations were carried out by Colliers. The valuations for the two hotels in South Korea were carried out by CBRE. For the eight student accommodation properties in USA, the valuations were carried out by JLL Valuation & Advisory Services, LLC. In determining the fair value of the Group’s portfolio, the discounted cash flow method, direct capitalisation method and residual land method were used. The valuation methods used are consistent with that used for the 31 December 2022 valuation and prior years. The Group’s portfolio was revalued at S$7.8 billion, resulting in a surplus of S$156.0 million of which S$101.1 million was recognised in the Consolidated Statement of Total Return and S$54.9 million was recognised in the Asset Revaluation Reserve on the balance sheet in FY 2023. The surplus for FY 2023 resulted mainly from higher valuation of the Group’s properties in Australia, Europe, Japan, Singapore and United Kingdom, partially offset by lower valuation from the properties in China, USA and Vietnam. The net impact on the Consolidated Statement of Total Return was S$75.1 million (net of tax and non-controlling interests). CAPITAL MANAGEMENT KEY FINANCIAL INDICATORS As at 31 December 2023 As at 31 December 2022 Aggregate Leveragei (%) 37.9 38.0 Unencumbered properties as % of total property value (%) 67 61 Interest Cover Ratio (times) 4.0 4.4 Adjusted Interest Cover Ratioii (times) 3.4 3.6 Effective Interest Rate (%) 2.4 1.8 Weighted Average Debt to Maturity (years) 3.7 4.0 i As at 31 December 2023, the ratio of net debt to net assets for CapitaLand Ascott REIT Group and CapitaLand Ascott BT Group is 67.7% and 21.1% respectively; the ratio for CLAS is 59.9%. ii Refers to EBITDA before change in fair value of financial derivatives, change in fair value of investment properties, investment properties under development and assets held for sale, revaluation surplus/(deficit) on land and buildings, and foreign exchange differences over interest expense and distributions on perpetual securities. CLAS adopts a prudent and disciplined approach towards capital management to ensure financial flexibility in its funding structure and to mitigate concentration risk. As at 31 December 2023, 67% of CLAS’ total debt was funded by bank borrowings and the remaining 33% was tapped from the debt capital market. As at 31 December 2023, CLAS’ outstanding borrowings was S$3,048.4 million (2022: S$2,874.6 million) with an effective interest rate at 2.4% per annum (2022: 1.8% per annum). To hedge against rising interest rates, approximately 81% of the total borrowings were effectively on fixed interest rates. CLAS is a stapled group comprising CapitaLand Ascott REIT and CapitaLand Ascott BT. The gearing of CLAS as at 31 December 2023 was 37.9% (2022: 38.0%) with a debt headroom of S$2.0 billion3 providing it with greater access to growth opportunities and increased capacity for more development and conversion projects. The gearing of CapitaLand Ascott REIT as at 31 December 2023 was 40.3% (2022: 39.7%), below the 45.0% gearing limit allowed by the Monetary Authority 3 Before reaching aggregate leverage of 50%; based on an aggregate leverage limit of 45%, the debt headroom is S$1.1 billion. 66 CAPITALAND ASCOTT TRUST
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