ENHANCING OUR PORTFOLIO, CREATING FURTHER CAPACITY FOR GROWTH Through our active portfolio reconstitution strategy, we continued to build a stronger portfolio and enhance the quality of our earnings. In 2024, CLAS completed over S$500 million in divestments at premiums of up to 55% above book value, realising approximately S$74 million in net gains. Part of the capital was reinvested into higher-yielding assets and used to reduce debts with higher interest rates, delivering accretion. The remainder has been earmarked for future acquisitions and AEIs. In 2024, CLAS completed about S$350 million in acquisitions. We acquired Teriha Ocean Stage, a rental housing property in Fukuoka, Japan, the remaining 10% stake in Standard at Columbia, a student accommodation property in USA, as well as lyf Funan Singapore, a hotel in our own homeground. Additionally, CLAS completed six AEIs. Apart from the refurbishment of guest rooms and common areas, the AEIs also included mechanical and engineering improvements and the adoption of technology to enhance operational efficiency and guest experience. The properties, which are in attractive locations of key gateway cities, have seen improved performance and valuation post-renovation. UNDERPINNED BY STRONG FINANCIAL POSITION AND DISCIPLINED CAPITAL MANAGEMENT Through our disciplined and prudent capital management strategy, CLAS is in a strong financial position despite the challenging market environment. CLAS has an investment grade credit rating of BBB with a stable outlook by Fitch Ratings. As at 31 December 2024, CLAS’ average cost of debt was 3.0% per annum and we expect it to remain relatively stable in 2025. About 77% of CLAS’ debt is effectively on fixed interest rates. CLAS’ gearing is 38.3%, below the 50% limit set by the Monetary Authority of Singapore, and interest cover is healthy at 3.1 times. Our exposure to foreign exchange movements is mitigated by our geographically diversified portfolio and hedging strategies. Sustainable financing accounts for approximately S$825 million, or 26% of CLAS’ total debt, underscoring our commitment to integrating environmental goals into our financing strategy. In 2024, CLAS was the first lodging trust to obtain a 1.5°C loan from OCBC, which supports CLAS’ and our sponsor CapitaLand Investment’s Net Zero target. We are grateful for the continued support of our investors and capital partners. POSITIONED FOR SUSTAINED GROWTH While macroeconomic uncertainties and geopolitical tensions remain, CLAS is cautiously optimistic about the demand for lodging. The United Nations World Tourism Organization projects international visitor arrivals to grow at a stabilised rate of 3% to 5% in 2025, driven by the ongoing recovery in Asia Pacific and strong growth in most other regions2. To create further capacity for growth, we will continue to strengthen our portfolio and earnings through divestments, acquisitions and AEIs. In January 2025, CLAS acquired two new hotels in Tokyo and Kanazawa, Japan. The blended net operating income yield of the acquisition is 4.3% in FY 2024, which is 230 basis points higher than the blended exit yield of approximately 2.0% for four previous divestments in Japan. The acquisition has a DPS accretion of 1.6% on a FY 2024 pro forma basis. By redeploying divestment proceeds into these higher-yielding assets, we have fully replaced the income from the four divested properties. In 2025, CLAS will also begin AEIs at The Cavendish London and Sydney Central Hotel. Along with the development of Somerset Liang Court Property Singapore, these initiatives are expected to further enhance CLAS’ performance upon their planned completion in 2026. As we reconstitute CLAS’ portfolio and enhance our existing properties to grow our core distributions, there may be some short-term impact on CLAS’ distribution income. We are committed to delivering stable distributions through enhancing core distribution income from operating performance and distributing non-periodic and/or divestment gains when appropriate. As we pursue growth, we are committed to doing so responsibly. In 2024, CLAS was named the Global Listed Sector Leader in the Hotel category in the 2024 GRESB Real Estate Assessment for the fourth consecutive year and, in February 2025, CLAS was the only lodging trust in Asia Pacific to be included in the S&P Global Sustainability Yearbook 2025. Thank you Stapled Securityholders for your trust in us. We look forward to your continued support as we forge ahead to strengthen CLAS’ position as a global lodging trust. Lui Chong Chee Serena Teo Chairman Chief Executive Officer 2 Source: World Tourism Organization (2025) 3 Annual Report 2024
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