- CapitaLand Ascott Trust’s 1Q26 business update was light on financial figures. While a y-o-y growth figure for the period’s gross profit was not provided this quarter, management shared that, directionally, 1Q26 gross profit was lower due to the closure of various properties, such as The Cavendish London, for AEIs, partially offset by stronger same-store operating performance.
Commitment to stable FY26 distribution per stapled security (DPS)
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- That being said, distribution income for the quarter remained relatively stable due to top-ups from past divestment gains and lower interest costs.
Remaining watchful for second order impact from the Iran War
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- Electricity costs constituted ~4% of CapitaLand Ascott Trust’s FY25 operating costs, and there will likely be some – albeit limited – impact from higher energy prices. Utility costs for master leases and living sector assets are largely borne by the master lessees and tenants, respectively, but for management contracts and management contracts with minimum guaranteed income (MCMGI), CapitaLand Ascott Trust has secured fixed rates with energy brokers until the end of 2026 in most instances.
- Management is looking to defer non-critical CAPEX, and AEI schedules may be adjusted in view of potentially higher renovation costs. We think CapitaLand Ascott Trust’s performance should remain resilient given its exposure to stable income sources (67% of 1Q26 gross profit) – including living sector assets, master leases, and MCMGI – offers some downside protection.
Gearing rose to 38.9%
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