CAPITALAND Ascott Trust : HMN 0%’s (Clas) gross profit for the first quarter ended March rose 15 per cent year on year, due to contributions from new properties and a stronger operating performance.
On Wednesday (Apr 24), the stapled group’s managers attributed the operating performance improvement to sustained demand for lodging and its portfolio reconstitution efforts.
About 64 per cent of the quarter’s gross profit comprised stable income – which is derived from master leases and management contracts with minimum guaranteed income, as well as longer-stay properties.
The remaining 36 per cent was derived from growth income, which comes from management contracts for hotels and serviced residences.
The higher proportion of stable income in Q1 FY2024 was due to the first quarter being a “seasonally softer quarter for transient travel”, added the managers.
Revenue per available room (RevPAU) for the quarter grew 6 per cent on the year to S$135 due to higher room rates, with all of Clas’ key markets – Australia, Japan, Singapore, UK and the US – registering higher RevPAU year on year.
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Clar’s managers said the latest portfolio RevPAU reached pre-Covid levels in the comparable quarter on a pro forma basis, which included the performance of Ascendas Hospitality Trust’s portfolio before its combination with Ascendas Residence Trust was completed on Dec 31, 2019.
Average occupancy of the portfolio stood unchanged at 73 per cent and formed 88 per cent of Q1 2019 pro forma levels.
Clas’ net asset value per stapled security stood at S$1.13 as at Mar 31, 2024.
The stapled group registered a 1 per cent loss for the quarter after factoring in the impact of foreign exchange after hedges on its gross profit, with 51 per cent of total assets in foreign currency hedged.
Gearing stood at 37.7 per cent, which its managers estimated to translate to S$2 billion in debt headroom.
Its average interest rate stood at 3 per cent per year with an interest cover of 3.7 times and a weighted average debt to maturity of 3.9 years.
Clas’ managers expect the stapled group’s gearing to remain under 40 per cent as part of proceeds from recent divestments have been used to pare down higher interest rate debt.
They however noted that the average cost of debt has increased to 3 per cent, mainly due to a higher proportion of the British pound and euro debt arising from new acquisitions.
Looking ahead, the managers expect Clas’ RevPAU to moderate after a strong rebound in FY2023, and to be primarily driven by occupancy as average daily rates stabilise.
Proceeds from divestments will be redeployed towards “more optimal, accretive uses”, including investing in higher-yielding assets, funding asset enhancement initiatives or paring down debt, they added.
Stapled securities of Clas ended Tuesday S$0.02 or 2.3 per cent higher at S$0.895.
