CapitaLand Ascott Trust H1 DPS dips 1% to S$0.0253
Revenue was up 3% year on year at S$398.5 million, from S$386.4 million
[SINGAPORE] The manager of CapitaLand Ascott Trust (Clas) on Tuesday (Jul 29) posted a 1 per cent drop in distribution per stapled security (DPS) to S$0.0253 for its first half ended Jun 30, from S$0.0255 in the previous corresponding period.
Excluding non-periodic items related to realised exchange gain from bank loan repayments and from cross currency interest rate swap settlements, core DPS was stable at S$0.024, compared with S$0.0241.
Revenue for the first half inched up 3 per cent to S$398.5 million from S$386.4 million in the year-ago period. Profit rose 6 per cent, to S$182.5 million from S$172.9 million previously.
The higher profit and revenue were mainly attributed to stronger operating performance, a portfolio reconstitution strategy and asset enhancement initiatives (AEIs), but were partly offset by the impact of other lower income and depreciation of foreign currencies against the Singapore dollar.
On a same-store basis, excluding acquisitions and divestments made between H1 2024 and H1 2025, gross profit was 4 per cent higher year on year, the manager said.
Clas completed six AEIs in 2024. These were for The Robertson House in Singapore, Citadines Les Halles Paris, Citadines Kurfurstendamm Berlin, La Clef Tour Eiffel Paris, Citadines Holborn-Covent Garden London and Temple Bar Hotel Dublin.
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The manager said it has planned AEIs across four of its properties. They are: Citadines Republique Paris, the Cavendish London, Sydney Central Hotel and Sotetsu Grand Fresa Osaka-Namba.
The capital expenditure for these AEIs stands at around S$205 million. Of this amount, Clas’ investment is about S$145 million while the remaining will be funded by the master lessee or operator of the properties.
Total distribution was largely unchanged on the year, at S$96.49 million, compared to S$96.47 million. Total core distribution, excluding the non-periodic items, was up 1 per cent on the year at S$91.6 million from S$91 million.
The distribution will be paid out on Aug 29, after the record date of Aug 6.
Revenue per available unit (RevPau) for H1 rose 3 per cent on the year to S$150 from S$145, on higher average occupancy rates, with most of its key markets posting RevPau growth.
However, the Reit’s Singapore properties experienced a slowdown this year, with Clas’ year-on-year RevPau for the market dropping by 3 per cent. Speaking at a briefing for Clas’ financial results, Serena Teo, chief executive officer of the managers of Clas, attributed the slowdown partly to a lack of events to drive demand. She noted that Taylor Swift concerts and the Singapore Airshow were some events that had contributed to a better RevPau last year.
Nevertheless, the United Kingdom and US markets have “picked up the slack”, she said. Its RevPau for the UK grew 4 per cent from the year before, while the RevPau for the US rose 8 per cent from a year ago.
Specifically, growth across its three hospitality properties in the US, which are based in New York, was driven by events. Meanwhile, its eight student accommodation properties in the US remain unaffected by the Trump administration’s recent visa restrictions on foreign students, as 90 per cent of their occupants are domestic students, said Teo.
In light of the weakening US dollar this year, she said that the trust has hedged more than 60 per cent of its projected income from the US at an exchange rate of US$1 to S$1.32.
“So given where the US dollar is trading today, we do think that the hedges that we have taken will put ourselves in a good position for a more resilient second half,” said Teo. As at Tuesday Jul 29, the US dollar was trading at around S$1.29.
Cost of debt to remain stable
Gearing stood at 39.6 per cent as at Jun 30, with a debt headroom of around S$1.8 billion, based on a gearing limit of 50 per cent. The stapled group’s proportion of debt on fixed rates was around 82 per cent as at end June, up from 76 per cent as at end March.
Clas’ weighted average debt to maturity was around 3.4 years and its interest cover was 3.1 times. Average cost of debt stood at 2.9 per cent as at end June.
Teo expects the average cost of debt to remain stable or reduce slightly as floating rates, which form about 20 per cent of its debt now, decline
For example, Clas had refinanced its floating rate Euro debt in Q2 to a fixed-rate debt as it was offered a “very attractive” rate that was 0.02 per cent higher than what was offered five years ago. “So every year we have about 20 per cent of our debt to be refinanced, so that will have a positive impact on us as we refinance them,” she said.
Portfolio reconstitution and enhancement
Lui Chong Chee, chairman of the managers of Clas, said the stapled group would continue seeking opportunities to reconstitute and enhance its portfolio. “By divesting properties at the optimal stage of their life cycle, we are able to reinvest the proceeds into higher-yielding acquisitions, AEIs or other value-accretive uses to deliver stable and sustainable returns to stapled securityholders,” he said.
While there are some uncertainties ahead due to the US tariffs, Teo said that Clas had taken steps to mitigate their impact. For example, Clas has deferred the purchase of non-essential cost items given the higher prices due to the tariffs. All of Clas’ properties have also taken steps to secure demand for their spaces since the first half of this year, in anticipation of volatility in travel demand in the second half of this year.
She said she was “fairly confident” that Clas will be able to meet its full-year DPS on a stable basis in Singapore dollars on a year-on-year basis. Clas’ DPS for FY2024 was S$0.061.
The counter closed up 0.6 per cent or S$0.005 at S$0.91 on Tuesday.
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