Current location site: Global

• Proposed acquisition is 1.8% accretive to Distribution per Stapled Security (DPS)
• Two existing CLAS properties in central Sydney and London to undergo asset enhancement initiatives (AEIs) with estimated yields on AEI cost of approximately 11%
• Property value of the two existing properties and new acquisition in London expected to increase by S$385.5 million^[1] after AEIs and stabilisation

Singapore, 2 August 2023 – CapitaLand Ascott Trust (CLAS) has signed a Memorandum of Understanding (MOU) with its sponsor, The Ascott Limited (Ascott), for a proposed DPS-accretive acquisition of three lodging assets in the United Kingdom (UK), Ireland and Indonesia at an agreed property value of S$530.8 million.  The three assets are a hotel in London, The Cavendish London; a hotel in Dublin, Temple Bar Hotel; and a serviced residence in Jakarta, Ascott Kuningan Jakarta.  The acquisition will enable CLAS to enhance its income streams and capitalise on the travel recovery and robust lodging demand.

Upon completion of the proposed acquisition, CLAS is expected to increase its total distribution by S$13.5 million and its DPS by 1.8% on a FY 2022 pro forma basis^[2].  The earnings before interest, taxes, depreciation and amortisation (EBITDA) yield of the proposed acquisition is 6.2%^[3] on a FY 2022 pro forma basis.

All three properties are in prime locations within key capital cities.  The 230-unit The Cavendish London is well-located in the exclusive Mayfair high-end shopping district of central London and the 136-unit Temple Bar Hotel is in the Temple Bar district, both of which are high-traffic areas near iconic attractions.  The 185-unit Ascott Kuningan Jakarta is in the capital city’s central business district, close to embassies and commercial offices.  For more information on The Cavendish London, Temple Bar Hotel and Ascott Kuningan Jakarta, please see Annex A.

The market revenue per available unit (RevPAU) in London, Dublin and Jakarta have exceeded pre-pandemic levels of 2019.  London’s market RevPAU for the first half of 2023 was 112% of the same period in 2019^[6].  In the first half of 2023, Dublin’s market RevPAU was 110% of pre-COVID-19 levels over the same period^[6] and is poised to grow even stronger as international travel resumes^[7].  In Indonesia, Jakarta’s market RevPAU in the first half of 2023 was 111% of the pre-COVID-19 levels over the same period^[6].   

With the acquisition of the three lodging assets, CLAS’ proportion of green certified properties (by gross floor area) is also expected to increase to approximately 39%, bringing CLAS closer to its target to green 50% of its global portfolio by 2025.

AEIs for two existing assets in Sydney and London expected to increase property values by S$210.6 million and provide yields on AEI cost of approximately 11%
Novotel Sydney Central in Australia and Citadines Holborn-Covent Garden London in the UK will remain operational during the AEIs.  

Novotel Sydney Central will undergo extension and renovation, adding 72 rooms across eight more floors, an approximate 28% increase from the hotel’s current inventory.  This brownfield initiative is expected to increase revenue for the property and expand its gross floor area by approximately 10%. Development approval has been obtained.  A new retail space will be added on the ground floor; the hotel’s existing 255 rooms, lift lobbies, corridors and façade will also be refreshed.  The AEI is expected to take place from 4Q 2024 to 1Q 2026.  Post AEI and stabilisation, the property is expected to achieve a valuation of A$339.8 million (approximately S$312.6 million^[8]) in 2028, an increase of approximately A$173.3 million (S$159.5 million) from the valuation as at 31 December 2022.  Based on the valuation by Colliers, the incremental EBITDA on stabilisation is expected to amount to A$10.1 million (approximately S$9.3 million) which translates to a yield on AEI cost of approximately 11.3%^[9].

Citadines Holborn-Covent Garden London is located at the heart of London’s historical and cultural precinct.  The AEI for Citadines Holborn-Covent Garden London will take place from 3Q 2023 to 1Q 2024, refreshing the design of the serviced residence’s 192 units and façade.  The property’s common areas and facilities such as the gym, meeting rooms and corridors will also be upgraded.  The valuation is expected to be GBP125.3 million (approximately S$217.0 million) following the renovation and stabilisation of the property in 2025, which is approximately GBP29.5 million (S$51.1 million) higher than the valuation as at 31 December 2022.  Based on the valuation by HVS, the incremental EBITDA is expected to amount to GBP1.2 million (approximately S$2.1 million) which translates to a yield on AEI cost of approximately 10.6%^[10].  For more information on Novotel Sydney Central and Citadines Holborn-Covent Garden London, please see Annex B.

With the completion of AEIs for Novotel Sydney Central, Citadines Holborn-Covent Garden London and The Cavendish London, the total property value of the three properties is expected to increase by S$385.5 million post-stabilisation.

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^{[1] Based on independent valuations by Colliers International Consultancy & Valuation (Singapore) Pte Ltd (Colliers) and SG&R Valuation Services Company LLC (HVS London) (HVS).
[2]  Part of the payment of the purchase consideration in relation to The Cavendish London and Temple Bar Hotel will be made upon substantial completion of the renovations of each of the properties (Milestone Payment).  The Milestone Payment amounts for The Cavendish London and Temple Bar Hotel are GBP37.0 million (approximately S$64.1 million) and EUR20.6 million (approximately S$30.5 million) respectively.  The effects of the renovations and the costs of financing the Milestone Payment are not taken into account in determining the pro forma financial effects, as the Milestone Payment will be made only upon substantial completion of the respective property renovations.
[3] The EBITDA yield of 6.2% is based on agreed property value of the properties excluding the Milestone Payment and before AEIs, if any.  Including the Milestone Payment, the EBITDA yield is 5.1%.
[4] Based on the exchange rate of GBP1.00 to S$1.73159 unless stated otherwise.
[5] Based on stabilised EBITDA before Furniture, Fixtures, and Equipment (FF&E) reserves in year 2027/28 over The Cavendish London’s agreed property value (GBP215.0 million (approximately S$372.3 million), estimated capitalised costs (GBP3.8 million (approximately S$6.6 million)), and estimated proportion of project cost attributable to CLAS (GBP 27.5 million (approximately S$47.6 million)), which is expected to be funded by bank borrowings. Such EBITDA figures are from the HVS valuation on a stabilised basis as commissioned by the Manager.
[6] Source: Extracted from STR database.
[7] Source: STR (November 2022) – “Ireland’s hotel industry is well-positioned heading into 2023”. 
[8] Based on the exchange rate of A$1.00 to S$0.9201 unless stated otherwise.
[9] Based on stabilised EBITDA before FF&E reserves in 2028 versus EBITDA in 2019 over estimated project cost attributable to CLAS of A$90.0 million (approximately S$82.8 million).
[10] Based on stabilised EBITDA before FF&E reserves in 2025 versus EBITDA in 2019 over estimated project cost attributable to CLAS of GBP11.5 million (approximately S$19.9 million).}