CapitaLand Ascott Trust Is a Well-Diversified Lodging Trust

CapitaLand Ascott Trust, or CLAS, is a hospitality trust focusing on serviced residences, hotels, rental housing and student accommodation. The trust is primarily a landlord whose lodging assets are managed by operators through master leases, management contracts with minimum guaranteed income, or MCMGI, and management contracts. Among these three, master leases contribute the majority of CLAS’ gross profit and help underpin income stability with a weighted average lease expiry, or WALE, profile of nine years. On the other hand, MCMGI and management contracts exposes the trust to higher variable returns, depending on market conditions. This is partially mitigated by MCMGI’s minimum guaranteed income that provides some downside protection.