CapitaLand Ascott Trust Delivers Stable Growth and Major Portfolio Moves in 3Q 2025: What Investors Need to Know

Key Highlights from the 3Q 2025 Business Update

CapitaLand Ascott Trust (CLAS), Asia Pacific’s largest lodging trust, continues to demonstrate resilience and growth amid global economic uncertainties. The trust reported strong financial and operational performance, portfolio reconstitution, and several strategic divestments and acquisitions that could have a material impact on future distributions and asset values.

1. Financial Performance and Operational Strength

• Gross Profit Growth: CLAS delivered a 1% year-on-year increase in 3Q 2025 gross profit, driven by stronger operating performance, successful portfolio reconstitution, and asset enhancement initiatives. On a same-store basis, gross profit was 2% lower due to a one-off land tax adjustment in Australia, but for the nine months of 2025, gross profit increased 4% y-o-y, with a 2% increase on a same-store basis.
• Revenue Per Available Unit (RevPAU): Portfolio RevPAU rose 3% y-o-y to S\$163, supported by higher occupancy (83% vs 79% last year). Key markets like Australia (+22%), UK (+9%), and USA (+8%) posted robust RevPAU gains, while Singapore saw a slight dip due to event timing but expects a rebound in 4Q 2025.
• Income Stability: Approximately 69% of gross profit in 3Q 2025 came from stable sources, including master leases and living sector assets (rental housing and student accommodation), which are proven to be resilient and counter-cyclical.

2. Strategic Portfolio Reconstitution: Major Divestments and Acquisitions

• Divestment of Citadines Central Shinjuku Tokyo: CLAS sold this mature property for JPY25.0 billion (S\$222.7 million), at c.100% premium to book value and a 40.4% premium to independent valuations. The sale unlocked a net gain after tax of JPY5.7 billion (S\$50.8 million). The property required significant capex, and the proceeds will be redeployed into higher-yielding assets, repayment of higher-interest debt, and other uses. The expected impact is a 1.0% accretion in DPS on a FY 2024 pro forma basis—an important, potentially price-sensitive update for shareholders.
• Acquisition of 3 Japan Rental Housing Properties: In August 2025, CLAS acquired three rental housing assets in Osaka and Kyoto for JPY4.0 billion (S\$34.2 million) at an expected NOI yield of 4% (vs. 0.4% yield from divested Citadines Karasuma-Gojo Kyoto). This move is set to more than replace income from the divested property, strengthen portfolio resilience, and deliver DPS accretion (+0.3% on FY 2024 pro forma).
• Completed Over S\$800 Million in Divestments & S\$560 Million in Acquisitions: CLAS has been actively recycling capital, divesting properties at significant premiums and reinvesting into prime, higher-yield locations to drive future growth and distributions.

3. Asset Enhancement Initiatives & Development Projects

• Ongoing AEIs and Redevelopment: CLAS completed seven projects since 2024 and has five major AEIs underway with c.S\$240 million in capex (S\$180 million funded by CLAS). Notable projects include the redevelopment of Somerset Liang Court Singapore (completion in 2026, opening in 2027), The Cavendish London (2026-2027), and Sydney Central Hotel (2026-2027). These initiatives are expected to uplift distribution income and portfolio value.
• Resilience and Flexibility: CLAS is monitoring macroeconomic conditions and may adjust AEI schedules to manage costs and optimize returns, signaling prudent operational management.

4. Capital & Risk Management

• Strong Financial Position: CLAS maintains a gearing of 39.3% (projected to fall to 37.2% after debt repayment from divestment proceeds), BBB Fitch rating (Stable Outlook), and S\$1.5 billion in available funds. The trust has well-staggered debt maturities and 78% of total debt on fixed rates, with an average borrowing cost of only 2.9%.
• Effective Hedging: 49% of assets are hedged for foreign currency risk, with 0% FX impact on gross profit for 9M 2025 post-hedges. Interest cover is healthy at 3.1x, and sensitivity analysis indicates resilience against interest rate increases.

5. Sustainability Leadership

• CLAS continues to align with CapitaLand Investment’s 2030 Sustainability Master Plan, with 68% of gross floor area green-certified and a target of 100% by 2030. The trust is recognized as an “Industry Mover” in S&P Global Sustainability Yearbook 2025, is a global sector leader in GRESB, and has secured S\$830 million in sustainable financing to date.

Important Shareholder Considerations & Price-Sensitive Updates

• Major Divestment at Significant Premium: The sale of Citadines Central Shinjuku Tokyo at c.100% premium to book value and sizable net gain can materially impact CLAS’s future distributions and balance sheet, likely supporting share price appreciation.
• Accretive Acquisitions Replacing Income: The acquisition of three Japanese rental housing properties with higher yields is expected to fully replace, and potentially increase, income lost from recent divestments.
• Deleveraging and Improved Financial Position: The use of divestment proceeds to reduce debt will lower gearing and interest expense, further enhancing DPS accretion and balance sheet strength.
• Active Portfolio Reconstitution: CLAS’s ongoing strategy of divesting mature assets and reinvesting in high-growth locations positions the trust for future value creation and stable distributions, which may positively influence share price.
• Robust Stable Income Sources: With 69% of gross profit from master leases and living sector assets, CLAS offers downside protection and resilience amid market volatility—a key factor for investor confidence.

Forward-Looking Outlook

• CLAS remains cautiously optimistic despite global uncertainties, supported by diversification across asset classes, geographies, contract types, and a robust pipeline of asset enhancements and developments. The trust is committed to delivering stable distributions by enhancing operating performance, distributing divestment gains when appropriate, and actively reconstituting its portfolio.

Disclaimer: This article is for informational purposes only and does not constitute investment advice or a solicitation to buy or sell any securities. Investors should consider their own financial circumstances and consult professional advisors before making investment decisions. Past performance is not indicative of future results. The information herein is based on publicly available materials and may be subject to change.

View CapLand Ascott T Historical chart here