CapitaLand Ascott Trust: A Resilient Lodging Giant
CapitaLand Ascott Trust (CLAS), Asia Pacific’s largest lodging trust, boasts a diversified portfolio of 100 properties spread across 45 cities in 16 countries. From hotels to serviced residences, rental housing, and student accommodations, the trust generates income from both stable and growth-oriented sources. As of 31 December 2024, its assets reached SGD 8.8 billion in value.
Recent Developments
CLAS has acquired two freehold hotels in Japan—ibis Styles Tokyo Ginza and Chisun Budget Kanazawa Ekimae—for JPY 21 billion, marking an 8.3% discount to their independent valuation. The acquisition allows for recycling JPY 7.7 billion from prior divestments into higher-yielding assets. Debt will fund 65.7% of the acquisition, with the remaining balance covered by divestment proceeds.
Performance and Projections
The acquisition is expected to enhance distributions, raising total distribution by SGD 3.9 million and DPS by 0.1 Singapore cents (+1.6%). Japan’s portfolio share in CLAS rises to 18%, and with a 37% YoY jump in revenue per available unit (RevPAU) in Q4 2024, the region remains a key growth driver.
Key Financials
- FY24 Revenue: SGD 809.5 million
- Gross Profit Margin: 45.8%
- DPS Yield (FY24): 6.8%
- Gearing: 38.3%
Recommendation
The analysts maintain a BUY rating with a fair value estimate of SGD 0.99. This reflects confidence in CLAS’s diversified portfolio, commitment to sustainable distributions, and the accretive impact of the Japan acquisitions.
CDL Hospitality Trusts: Steady Growth Amid Challenges
CDL Hospitality Trusts (CDLT) continues to strengthen its position as a key player in the hospitality sector. Its diversified portfolio benefits from its exposure to multiple geographies.
Key Financial Metrics
- Price-to-Earnings (FY25E): 19.4x
- Price-to-Book (FY25E): 0.6x
- Dividend Yield (FY25E): 6.6%
Challenges and Opportunities
CDLT faces competition from new supply and potential macroeconomic slowdowns. However, it is well-positioned to capitalize on stronger-than-expected lodging demand and DPS-accretive acquisitions.
Recommendation
The analysts view CDLT as a stable investment choice, given its solid financial standing and ability to navigate market challenges.
Far East Hospitality Trust: A Focused Strategy
Far East Hospitality Trust (FAEH) remains committed to providing consistent returns through its hospitality-focused portfolio.
Key Financial Metrics
- Price-to-Earnings (FY25E): 17.5x
- Price-to-Book (FY25E): 0.7x
- Dividend Yield (FY25E): 6.8%
Growth Prospects
FAEH’s disciplined approach to capital management and its focus on operational efficiency provide a stable platform for growth. It is well-positioned to benefit from a recovery in travel demand.
Recommendation
The analysts maintain a positive outlook on FAEH, underscoring its solid fundamentals and growth potential.
Frasers Hospitality Trust: Stable Yet Cautious
Frasers Hospitality Trust (FRHO) adopts a conservative approach, focusing on long-term value creation for its stakeholders.
Key Financial Metrics
- Price-to-Earnings (FY25E): 20.0x
- Dividend Yield (FY25E): 3.7%
Challenges
FRHO’s subdued dividend yield compared to its peers reflects its cautious strategy. However, its focus on operational resilience positions it well for future opportunities.
Recommendation
The analysts suggest a HOLD stance on FRHO, highlighting its steady yet conservative approach to growth.
Conclusion
OCBC Investment Research highlights the unique strengths and challenges of each hospitality REIT. CapitaLand Ascott Trust emerges as the top pick with a BUY rating, underpinned by its diversified portfolio and accretive acquisitions. CDL Hospitality Trusts, Far East Hospitality Trust, and Frasers Hospitality Trust also present compelling investment cases, albeit with varying levels of caution and strategic focus.
