Capitaland Ascott Trust Is An Undervalued SReit Lodging Giant
๐๐๐Capitaland Ascott Trust (CLAS)$CapLand Ascott T(HMN.SI)$
is the largest lodging trust in Asia Pacific with an asset value of SGD 8.5 billion as at 30 June 2024. CLAS has just hit a 52 week high on Thursday with news that the Feds has finally cut interest rate by 50 basis points.
CLAS' primary objective is to invest in income producing real estate and real estate related assets which are used predominantly as serviced residences, rental housing properties, student accommodation and other hospitality assets in the world.
CLAS has an impressive portfolio of 102 properties with more than 18,000 units in 45 cities across 16 countries in Asia Pacific, Europe and the US as at 30 June 2024.
CLAS' brands - The Ascott, Somerset, Quest and Citadines are synonymous with quality accommodation in providing guests with a Home Away from Home experience complete with excellent furnishings and facilities.
CLAS' properties are located in key gateway cities such as Barcelona, Berlin, Brussels, Hanoi, Ho Chi Minh City, Jakarta, Kuala Lumpur, London, Manila, Melbourne, Munich, New York, Paris, Perth, Seoul, Sydney, Tokyo and Singapore.
In Singapore alone, CLAS owns The Ascott Orchard, 1yf One North Singapore, Somerset Liang Court and Robertson House by Crest Collection.
CLAS is a wholly owned subsidiary of Capitaland Investment $CapitaLandInvest(9CI.SI)$
On 26 July 2024, CLAS increased its 1H 2024 gross profit by 12% year on year to SGD 172.9 million. Revenue also rose by 11% year on year, reaching SGD 386.4 million. This increase was mainly on the back of sustained Lodging demand and stronger operating performance.
As demand for international travel continues to increase, CLAS ' revenue per available unit (REVPAU) for 1H 2024 grew 5% to SGD 145 compared to 1H 2023. For the quarter, CLAS' REVPAU for 2Q 2024 went up by 4% year on year to SGD 155. This exceeds pre pandemic levels, at 102% of 2Q 2019 REVPAU. This increase was a result of higher room rates, with key markets Japan and USA leading the growth.
CLAS has a gearing ratio of 37.2% which is well below the 50% gearing limit set by MAS. CLAS' average cost of debt remains low at 3% per annum as at 30 June 2024. It is expected to be stable through to the end of 2024 as 82% of CLAS' debt is on fixed rates and the weighted average debt to maturity is 3.6 years. Interest Cover is also healthy at 3.7 times.
CLAS paid a Distribution per unit (DPU) for 1H 2024 of 2.55 cents. The current DPU yield is 5.79%. DPU are paid twice a year. The latest DPU was paid on 29 August 2024.
Performance wise CLAS is up 1.5% on Thursday and in the last 5 days it has risen 5.4%. However CLAS is still down 1.5% year todate and 1.5% in 2023.
Financial Analysts are Bullish on CLAS with a Buy rating, Target price ranging from a high of SGD 1.37 to a low of SGD 1.04.
The rate cuts in the US and the Eurozone are positive catalysts for CLAS.
I have been holding CLAS since 2021 and I am happy that it is a well managed SReit with a strong sponsor in Capitaland Invest. CLAS is also profitable and has a solid balance sheet with a good gearing ratio of 37.2%. Best of all, I love receiving the nice juicy dividends twice year. The current dividend yield of 5.79% is much better than putting money in Singapore Fixed Deposits, Treasury bills. On top of that I get the capital growth too as CLAS continues to expand its portfolio of quality Lodging globally. At the last closing price of SGD 98 cents per share, Capitaland Ascott Trust is undervalued as it has lots of upside potential ahead.
Global tourism expenditure is projected to reach USD 2 Trillion in the 2024, of which hotel and Lodging industry forms an integral part. Capitaland Ascott Trust is in prime position to benefit from the robust demand globally.
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- Ah_Mengยท09-21TOPCongratulations... I used to own some shares when Ascott IPO... sold long time ago... the dividends have always been stable... the only beef I have with Ascott is the share price, which is always around a certain range. Perhaps it is the REIT's biz model... it tends to sell its properties after holding for some time (mostly with appreciation), which in theory is good. Unless they paid up special dividends from time to time (can't remember), its assets value should have appreciated a lot by now... still watching this space, not committed to move back in... yet.1Report