- Limited financial details were disclosed in this business update. 1Q26 distributable income was stable YoY, supported by the release of past divestment gains (just under S$10mn) to offset income loss from the temporary closure of The Cavendish London (TCL) for renovations and Madison Hamburg for works at the carpark, as well as interest savings from lower rates.
- Excluding TCL, as well as acquisitions and divestments, 1Q26 portfolio RevPAU increased 1% YoY despite ongoing geopolitical tensions. On a reported basis, RevPAU declined 2.8% to S$137 mainly due to properties undergoing AEI. Portfolio occupancy remained stable YoY at 77%.
- Upgrade from ACCUMULATE to BUY with an unchanged DDM-TP of S$1.08 due to the recent share price weakness. CLAS remains our top pick in the hospitality sector, given its geographical diversification and broad-based guest mix. In addition, 67% of 1Q26 gross profit came from stable income sources, while its growing exposure to the living sector (18% of AUM) offers greater resilience across market cycles. We expect low single-digit portfolio RevPAU growth in FY26e, supported by the U.S. portfolio, which should benefit from stronger lodging demand ahead of the upcoming FIFA World Cup 2026. Management is expected to utilise past divestment gains to offset the earnings impact from The Cavendish London AEI through completion in 2027, underpinning stable FY26e DPU. The impact of the Middle East conflict on CLAS is likely to be limited, as utility costs are largely either borne by lessees or tenants, or fixed through at least end-2026. In addition, any moderation in international travel arising from the conflict and higher airfares could potentially be offset by stronger domestic and regional demand. The current share price implies an FY26e dividend yield of 6.8%.
Continue Reading
