CAPITAL MANAGEMENT CLAS adopts a prudent and disciplined approach towards capital management to ensure financial flexibility in our funding structure and to mitigate concentration risk. CLAS’ strong financial and cash positions have enabled us to remain resilient against an uncertain macroeconomic backdrop and capture inorganic growth opportunities, delivering sustainable returns to our Stapled Securityholders. As at 31 December 2023, CLAS had total available funds of S$1.32 billion, comprising cash on-hand and available credit facilities. 67% of CLAS’ total debt was funded by bank borrowings and the remaining 33% was tapped from the debt capital market. CLAS’ outstanding borrowings was S$3.0 billion with an effective interest rate of 2.4% per annum and weighted average debt to maturity of 3.7 years. To hedge against rising interest rates, approximately 81% of the total borrowings were effectively on fixed interest rates. As at 31 December 2023, CLAS’ gearing was 37.9%, with a debt headroom of S$2.0 billion2, providing it with greater access to growth opportunities and increased capacity for more development and conversion projects. For more information on CLAS’ financial performance, please refer to the Financial Review section on pages 62 to 68 and Financial Statements on pages 144 to 343 of CLAS’ Annual Report 2023. SUSTAINABLE FINANCE CLAS continues to align our environmental goals with our financing needs, collaborating with like-minded stakeholders in the financing and investment community. In February 2022, CLAS’ Sustainability-Linked Finance Framework was published, demonstrating its commitment to sustainable financing, and serving to align CLAS’ ESG goals with the CLI 2030 SMP. CLAS also obtained a Second-Party Opinion from Moody’s ESG Solutions on its Framework. Moody’s noted that CLAS’ key performance indicators were clearly defined, measurable and demonstrated a robust level of ambition compared to its peers in the hospitality sector, and that the Framework clearly disclosed CLAS’ strategies to achieve its sustainability performance targets, acknowledging the credibility of the strategies. Under the Framework, CLAS issued its inaugural sustainability-linked bond in April 2022. CLAS was the first hospitality trust globally and the first Singaporelisted real estate trust to launch a sustainability-linked bond and achieved a greenium4 through the issuance. The bond was well-received by institutional investors at about 2.2 times oversubscribed and was upsized from S$150 million to S$200 million. Under the issuance of this bond, CLAS has committed to a sustainability performance target of greening 50% of its total portfolio by the end of 20255. As at 31 December 2023, 49% of CLAS’ total portfolio has been green-certified. CLAS remains on track to achieve the sustainability performance target by 2025, in relation to the bond issued in April 2022. In November 2022, CLAS partnered the International Finance Corporation (IFC) to launch IFC’s first sustainability-linked bond in the hospitality sector globally. Proceeds of approximately S$168.6 million from the bond will be used to refinance CLAS’ existing borrowings and to further decarbonise three of our serviced residences in Southeast Asia, namely Ascott Jakarta in Indonesia as well as Ascott Makati and Somerset Millennium Makati in the Philippines. The three properties are expected to achieve a 40.5% reduction6 in electricity consumption, and to also obtain IFC’s Excellence in Design for Greater Efficiencies (EDGE) certification by the end of 2028. As at 31 December 2023, the three properties have achieved a 44.4% reduction in electricity consumption, tracking ahead of the sustainability performance target of 40.5%. Additionally, two of the three properties have obtained the EDGE certification. CLAS is on track to achieve the sustainability performance targets by 2028, for the bond launched in November 2022. In FY 2023, CLAS entered into a sustainability-linked cross currency interest rate swap of JPY11.0 billion. In total, CLAS has raised about S$551.2 million through sustainable financing. 4 Greenium or green premium refers to the cheaper cost of funding by issuing debt that have positive environmental impact as compared to traditional bonds. 5 By the total gross floor area, excluding properties under development. 6 Against EDGE 2019 base case. n Sustainability-linked bond 64% n Sustainability-linked cross currency swap 18% n Green loan 9% n Sustainability-linked loan 9% TOTAL SUSTAINABLE FINANCING SUSTAINABILITY REPORT 2023 72
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