CapitaLand Ascott Trust Q1 Gross Profit Up 15% on More Demand, Bigger Portfolio

CapitaLand Ascott Trust achieved a 15 percent increase in gross profit during the first quarter of this year, compared with the same period in 2023, with the trust’s managers citing sustained lodging demand and expansion of its portfolio as boosting the Singapore-listed REIT’s performance.

The result was aided by contributions from Teriha Ocean Stage, a rental housing property in Japan’s Fukuoka acquired in January, and Standard at Columbia, a US student accommodation that began accepting tenants last August, the stapled trust’s managers said Wednesday in a business update.

Stripping out acquisitions and divestments between the first quarter of 2023 and the comparable period this year, gross profit still climbed 7 percent, according to CLAS’s managers, which are owned by Temasek-controlled CapitaLand Investment.

Revenue per available unit rose 6 percent year-on-year during the first quarter to equal pre-COVID RevPAU in the same quarter of 2019, with higher room rates driving growth as the average occupancy of the portfolio remained stable at 73 percent.

All of the $6.3 billion trust’s key markets — Australia, Japan, Singapore, Britain and the US — saw higher RevPAU on a yearly basis, the managers said.

Bigger in Japan

CLAS quietly announced its purchase of Teriha Ocean Stage, a 258-unit turnkey project in Fukuoka’s Island City residential area, in a one-sentence statement tucked into the trust’s 2023 results released in January.

No further details about the deal were provided at the time, but Wednesday’s business update gave the acquisition price as JPY 8 billion ($52 million) and the estimated net operating income yield as 4 percent. The newly built property was developed by Japan’s Sekisui House.

The REIT also gained from the contribution of Standard at Columbia, a 678-bed accommodation serving the University of South Carolina. In 2021, CLAS (then known as Ascott Residence Trust) teamed with sister firm The Ascott Ltd to acquire the development for $109.9 million. The asset was valued at S$158 million ($116 million) at the end of 2023.

The trust’s divestments in the first quarter of this year included three assets in Japan and one each in Singapore and Australia.

In January, CLAS sold Citadines Mount Sophia, a 154-unit serviced apartment block near Singapore’s Bugis area, to a joint venture of BlackRock and Weave Living for S$148 million. In March, the trust sold a trio of Osaka hotels to Axe Management Partners — a property investment firm backed by some of Hong Kong’s wealthiest families — for JPY 10.7 billion and disposed of Courtyard by Marriott Sydney-North Ryde as part of a A$109 million ($71 million) deal that will also include the divestment of Novotel Sydney Parramatta.

Balanced Approach

CLAS in January posted a 25 percent rise in 2023 distribution to S$237 million. The stapled trust comprising CapitaLand Ascott REIT and CapitaLand Ascott Business Trust increased its distribution per stapled security by 16 percent to 6.57 Singapore cents.

The REIT reported a fair-value gain on the year of S$156 million, marking a 2 percent increase in portfolio valuation, as a stronger operating performance and outlook for its portfolio overcame higher capitalisation rates and discount rates.

“Our balanced portfolio of stable and growth income streams enables CLAS to capture growth opportunities while remaining resilient amidst uncertainties,” said then-chairman Bob Tan, who was succeeded by Lui Chong Chee this week.