Financial Performance: Stability Amid Ongoing Asset Enhancements

Distribution income for 1Q 2026 remained stable despite gross profit being impacted by property closures for renovations and asset enhancement initiatives (AEIs). Key factors affecting gross profit include:

• Closure of The Cavendish London (TCL) for renovations
• Partial closure of Madison Hamburg for carpark works (reopened, remaining works to finish in 2Q 2026)
• Negative net impact from recent acquisitions, divestments, and ongoing AEIs, pending deployment of proceeds and completion of projects

Mitigating these impacts, CLAS distributed past divestment gains and benefited from interest savings due to lower rates. Further interest savings are expected in 2Q 2026 from repayment of higher-interest debt with divestment proceeds, providing additional income stability.

Key Market Updates: Performance Across Geographies

• Australia: RevPAU for hotels and serviced residences under management contracts increased 7% y-o-y to AUD 188, driven by major events and domestic demand. Master lease revenue rose 3% y-o-y. Forward bookings for 2Q 2026 remain healthy.
• France: Revenue decreased 4% y-o-y due to AEI at Citadines Place d’Italie Paris. Excluding this property, revenue was stable. Average occupancy and room rates are above last year; group and long-stay bookings expected to support 2Q 2026.
• Japan: Same-store RevPAU up 3% y-o-y (excluding acquisitions/divestments), supported by higher occupancy. Limited impact from China’s travel advisory and Middle East conflict. Rental housing acquisition in Feb 2026 (JPY4.6 billion, 4.1% NOI yield) increased living sector proportion and provided stable income (>95% occupancy).
• Singapore: RevPAU up 2% y-o-y, driven by the Singapore Airshow. Outlook for 2Q 2026 is positive, with performance underpinned by long stays and regional demand.
• United Kingdom: The Cavendish London closed for AEI. Same-store RevPAU increased 1% y-o-y, supported by Citadines Holborn-Covent Garden’s completed AEI. Demand remains supported by regional and domestic sources.
• United States: RevPAU for hotels dipped 1% y-o-y due to Sheraton Tribeca New York Hotel AEI, but excluding this property, RevPAU increased 7%. Student accommodation pre-leasing >80% for AY 2026-2027, pacing ahead of last year; revenue increase expected.

Portfolio Updates: Strategic Divestments and Accretive Acquisitions

• Completed over S\$800 million in divestments (2024-YTD 2026) at up to 100% premium to book value.
• Reinvested S\$600 million into quality, higher-yielding assets in prime locations and living sector properties.
• Latest acquisition: Three rental housing properties in Southern Kanagawa (Greater Tokyo) for JPY4.6 billion, funded by JPY-denominated debt, delivering a 4.1% NOI yield and 0.2% distribution per stapled security (DPS) accretion.

Asset Enhancement Initiatives (AEIs):

• Four ongoing AEIs in 2026 (TCL, Sotetsu Grand Fresa Osaka-Namba, Sheraton Tribeca New York Hotel, Citadines Place d’Italie Paris), with total capital expenditure of S\$260 million (CLAS’ share S\$180 million).
• Redevelopment of Somerset Liang Court Singapore into Somerset Clarke Quay Singapore (192-unit serviced residence) to be completed in 2026, operational in 2027.
• AEIs are expected to uplift property values and future profitability, providing capacity for growth and higher distributions post-completion.

Sustainability Highlights: Strengthening ESG Credentials

• Recognised in S&P Global Sustainability Yearbook (2025, 2026) and as Global Listed Sector Leader – Hotel by GRESB for five consecutive years.
• Upgraded to ‘AA’ in MSCI ESG ratings (Mar 2026), ‘Negligible’ ESG risk by Sustainalytics.
• c.70% of gross floor area green certified (met 50% target in 2025, on track for 100% by 2030).
• c.S\$830 million in sustainable financing to date.
• Externally assured sustainability report; zero fatality, permanent disability or major injury.

Capital & Risk Management: Strong Financial Position

• 38.9% gearing (c.S\$1.9 billion debt headroom), with c.S\$1.51 billion total available funds (S\$539 million cash, S\$972 million credit facilities).
• 68% of property value unencumbered; interest cover at 3.0x.
• Low effective borrowing cost at 2.8% p.a.; 78% of total debt on fixed rates (weighted average debt maturity: 3.1 years).
• Debt maturity well-staggered; diversified funding sources (JPY 40%, USD 17%, EUR 17%, SGD 15%, GBP 10%, KRW 1%).
• Fitch Ratings BBB (Stable Outlook).

Sensitivity analysis shows that CLAS can withstand a 10% decrease in EBITDA or a 100 bp increase in interest rates, with interest cover remaining above regulatory thresholds and DPS impact limited to 0.28 cents.

Looking Ahead: Resilience Amid Macroeconomic Uncertainties

• CLAS’ diversified portfolio and stable income sources (60-70% of gross profit) cushion the impact of geopolitical tensions, interest rate and currency volatility, and higher operating costs.
• Limited exposure to energy price volatility; utility costs mostly borne by lessees or tenants. Electricity cost accounted for only 4% of operating costs in FY 2025.
• Master leases and MCMGI contracts offer downside protection; living sector assets are counter-cyclical and resilient.
• Potential delay in rate cuts due to inflation is mitigated by high proportion of debt on fixed rates and robust capital management.
• Near-term impact of Middle East conflict assessed as low to medium for CLAS properties, with limited guest profile exposure (<2% from Middle East), and strong domestic/regional demand expected to offset international travel moderation.
• Contribution from completed AEIs and development projects (Somerset Clarke Quay Singapore, TCL, Citadines Place d’Italie Paris, etc.) expected to drive higher income and DPS from 2026 onwards.

Strategic Priorities: Balancing Stable Income and Growth

• Proactive investment and portfolio management: accretive acquisitions, strategic divestments, targeted asset enhancements.
• Progressing towards medium-term allocation: 25-30% living sector, 70-75% hospitality assets.
• Strong financial position supports disciplined capital management and stable distributions.
• Commitment to distribute stable income through operating performance and, when appropriate, divestment gains.

Key Details for Shareholders & Price-Sensitive Information

• Ongoing AEIs and property closures (TCL, Madison Hamburg, Sheraton Tribeca New York Hotel, Citadines Place d’Italie Paris, etc.) may temporarily impact income but are expected to significantly uplift returns and asset values post-completion.
• Strategic divestments at premium to book value and reinvestment into higher-yielding assets could drive future DPS growth and enhance portfolio quality.
• Stable income sources and robust capital management mitigate macroeconomic risks, supporting CLAS’ resilience and long-term value.
• Expansion of living sector assets (rental housing, student accommodation) increases portfolio stability and counter-cyclical income streams.
• Sustainability achievements and green certifications may attract ESG-focused investors and support long-term share value.

Disclaimer

This article is for informational purposes only and does not constitute investment advice. All forward-looking statements are subject to risks, uncertainties, and assumptions. Actual performance may differ materially. Investors should conduct their own due diligence and consult professional advisers before making any investment decisions. Past performance is not indicative of future results.

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