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Just noticed that in the latest quarterly update, Capitaland Ascot has indicated that their all in interest rate is now 3%. In the 2H 2023 annual report it was 2.4%, so, that is an increase of around 0.6% (25% higher interest rates for the year).

Assuming that the impact is over whole of FY 2024, that means, the annual interest expense (finance cost in annual report) will go from 86.8 Million SGD to SGD 108.5 million, an increase by SGD 21.7 million.

In the quarterly update, gross profit growth on a like for like basis excluding divestments is 7% "On a same-store basis, excluding acquisitions and divestments, between 1Q 2023 and 1Q 2024, gross profit was 7% higher y-o-y due to stronger operating performance". 7% growth is 23.6 Million Gross profit growth.

Assuming that all else remains equal, in essence, the DPU growth will be 1.9 million SGD divided by the 4 billion units, which is essentially flat.

I guess that is still decent performance, especially in a high interest rate scenario and DPU growth is too much to hope for in the current scenario.

Hi Shrivathsa

A few additional thoughts to the things that will not remain constant:

(1) As of end March2024, CLAS has 102 properties, a reduction of 4 from end 2023. Interest expenses from the mortgages attached to the 4 sold properties will not be incurred in FY24. Also, cash proceeds from the divestments may be used to pay down "higher interest" loans. So while effective interest rate will be higher but overall borrowings should be reduced.

(2) Towards the end of last year, some of the Paris hotels were converted from master leases to management contracts. With Paris Olympics coming in 2024, this will allow CLAS to enjoy the upside. Granted this is only a few hotels and probably add +/-1mil to the overall gross income.