CapitaLand Ascott Trust Review @ 5 February 2023

Basic Profile & Key Statistics

• Main Sector(s): Hospitality
  
• Country(s) with Assets: Australia, United States, Japan, England, Singapore, France, China, Vietnam, Philippines, Germany, Indonesia, Belgium, Spain, South Korea, Malaysia
• No. of Properties (exclude development/associate/fund): 103

Key Indicators

Performance Highlight

Revenue, gross profit, distribution and DPU improved yoy mainly due to stronger operating

performance of the existing portfolio and contributions from newly acquired properties.

Revenue per Available Unit

REVPAU has improved in which properties from Australia, Singapore, UK and US performed at pre-Covid RevPAU levels.

Acquisition

In 2H 2022, CLAS completed the acquisition of 9 properties In France, Japan, Vietnam, US And Australia as well as 2 rental housing properties in Japan. There are 2 properties in Japan target to complete the acquisition in 1H 2023 and 1 rental housing property in 2024.

Development

2 developments are ongoing where Somerset serviced residence is expected to complete in 2H 2025 and the U.S. student accommodation is expected to complete in 2Q 2023.

Asset Enhancement Initiative

AEIs for multiple properties are to be commence in by 2Q 2023. AEIs for Riverside Hotel Robertson Quay and Citadines Kurfürstendamm Berlin are expected to complete by end 2023, while for Citadines Holborn-Covent Garden London and Citadines Les Halles Paris are expected to complete by 1Q 2024.

Distribution Breakdown

• Distributable Income Breakdown:
• 88.5% from Operation
• 11.5% from Fees Payable/Paid in Units
• Distribution = 100% of Distributable Income
• Distribution to Perpetual Securities Holder = 7.1% of Distributable Income

Related Parties Shareholding

• REIT Sponsor's Shareholding: Above median for more than 10%
• REIT Manager's Shareholding: Above median for more than 20%
• Directors of REIT Manager's Shareholding: Below median for more than 20%

Lease Profile

• Income in SGD/Major Currencies: Below median for more than 10%
• WALE: Above median for more than 20%
• Highest Lease Expiry within 5 Years: Above median for more than 20%; Falls in 2027 and beyond, without breakdown
• Weighted Average Land Lease Expiry: Above median for more than 10%

Debt Profile

• Gearing Ratio: ± 10% from median
• Gearing including Perps: ± 10% from median
• Cost of Debt: Below median for more than 20%
• Fixed Rate Debt %: ± 10% from median
• Unsecured Debt %: Below median for more than 20%
• WADM: Above median for more than 10%
• Highest Debt Maturity within 5 Years: Below median for more than 10%; Falls in 2027 and beyond, without breakdown
• Interest Coverage Ratio: ± 10% from median

Diversification Profile

• Top Geographical Contribution: Below median for more than 20%
• Top Property Contribution: Below median for more than 20%
• Top 5 Properties' Contribution: Below median for more than 20%
• Top Tenant Contribution: ± 10% from median
• Top 10 Tenants' Contribution: Below median for more than 20%

Key Financial Metrics

• Property Yield: Below median for more than 20%
• Management Fees over Distribution: ± 10% from median; $6.25 distribution for every dollar paid 
• Distribution on Capital: Below median for more than 20%
• Distribution Margin: Below median for more than 20%

Trends

• Slight Downtrend: NAV per Unit
• Downtrend: DPU, Property Yield, Interest Coverage Ratio, Distribution on Capital, Distribution Margin

Relative Valuation

• P/NAV - Above average for 1y & 5y; Above +1SD for 3y
• Dividend Yield - Average for 1y, 3y & 5y

Author's Opinion

Favorable	Less Favorable
High REIT Sponsor's Shareholding	Low Directors of REIT Manager's Shareholding
High REIT Manager's Shareholding	High Perpetual Securities %
Long WALE	Low Unsecured Debt %
Long Weighted Average Land Lease Expiry	Low Property Yield
Low Cost of Debt	Low Distribution on Capital
Long WADM	Low Distribution Margin
Low Top Geographical Contribution	DPU Downtrend
Low Top Property & Top 5 Properties' Contributions	Property Yield Downtrend
Top 10 Tenants' Contribution	Interest Coverage Ratio Downtrend
	Distribution on Capital Downtrend
	Distribution Margin Downtrend

Performance has improved a lot from the gradual recovery of travel. Cited from the presentation, UNWTO (World Tourism Barometer, World Tourism Organization, Jan 2023) expects the international arrivals to reach 80% to 95% of pre-pandemic levels in 2023, a significant improvement from 63% of pre-pandemic levels as in 2022. Coupled with the China border opening and recent acquisitions, ART performance is expected to improved moving forward.

The gradual recovery of travel has greatly contributed to improved performance. From the presentation, UNWTO (World Tourism Barometer, World Tourism Organization, Jan 2023) expects international arrivals to reach 80-95% of pre-pandemic levels in 2023, improve significantly from 63% in 2022. Coupled with the opening of China's borders and recent acquisitions, the performance should seen improvement going forward.

For more information, check out:

SREITs Dashboard - Detailed information on individual Singapore REIT

SREITs Data - Overview and details of Singapore REIT

REIT Review - List of previous REIT review posts

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*Disclaimer: The information presented on this blog is for educational and informational purposes only. The materials, including research and opinions, are based solely on my own findings and should not be considered as professional financial advice or a definitive statement of fact. I cannot guarantee the accuracy, completeness, or reliability of the information provided. I shall not be held liable for any errors, omissions, or losses that may occur as a result of using the information presented on this blog. It should be noted that the information presented on this blog does not constitute a buy, sell, or hold recommendation for any security. It is crucial to conduct your own thorough research and due diligence before making any investment decisions.