CapitaLand Investment Limited - Annual Report 2021

STRENGHTENING PORTFOLIO RESILIENCE BY EXPANDING IN ADJACENT LODGING ASSET CLASSES In addition to increasing its recurring fee income by securing more management and franchise contracts, Ascott’s growth strategy also includes investing in quality lodging properties, including via its investment vehicles such as its sponsored hospitality trust, Ascott Residence Trust (ART) and its private funds, Ascott Serviced Residence Global Fund (ASRGF) and the newly established Student Accommodation Development Venture (SAVE). Ascott’s funds under management grew to over S$8 billion in FY 2021. With a global presence and strong business development teams on the ground, Ascott has the distinct capacity to create value by connecting its partners with investment opportunities. Leveraging its extensive local knowledge, Ascott is able to access off-market investment deals and match them with a ready pool of trusted lodging property owners and capital partners. To further strengthen the resilience of Ascott’s portfolio and add to its stable income streams, Ascott increased its presence in the longer-stay lodging segment such as student accommodation and rental housing properties. Student Accommodation Ascott entered the student accommodation asset class following the expansion of ART’s investment mandate to include student accommodation properties in January 2021. A longer-stay asset class, student accommodation properties have leases that typically last for a year, boosting income stability and portfolio resilience. As at 1Q 2022, Ascott has built up a diversified and quality portfolio of 10 student accommodation properties with over 5,200 beds in the USA and Japan. Located across eight states, the student accommodation properties in the USA are predominantly in the Sunbelt states, Ivy League and ‘Power 5’ athletics conference markets. Situated near their respective key educational institutions, the nine student accommodationproperties serve over 295,000 students from reputable universities with large student populations, steady enrolment growth and a strong athletics programme. This includes Ascott’s and ART’s joint investment and development of a freehold student accommodation property in South Carolina for an expected total of US$109.9million (S$146.2million)¹. The 678-bed student accommodation, Standard at Columbia, will serve over 35,000 undergraduate and graduate students from the nearby University of South Carolina. The student accommodation property is scheduled to be completed in 2Q 2023. Seven of the USA student accommodation properties acquired through ART for a total of US$461.3 million (S$623.7 million) are operating and contributing stable income. They are new assets with an average age of two years, offering students well-designed apartments equipped with best-in-class facilities. ART’s first student accommodationproperty, the 525-bed PalomaWestMidtown, inGeorgia, USA, was acquired in February 2021 for US$95.0 million (S$126.3 million) and serves about 40,000 students from Georgia Institute of Technology. Wildwood Lubbock, a freehold 1,005-bed student accommodation property in Texas, was acquired for US$70.0 million (S$93.8 million) in September 2021. Wildwood Lubbock serves over 40,000 undergraduate and graduate students at Texas Tech University. In November 2021, ART acquired Seven07, a freehold 548-bed student accommodation proper ty in Champaign, Illinois, for US$83.25 million (S$112.4 million). Seven07 serves about 56,000 undergraduate and graduate students from the nearby University of Illinois Urbana-Champaign. ART announced in December 2021 the acquisition of four student accommodation properties in the USA for US$213.0 million (S$291.2 million). The four properties have a total of 1,651 beds, serving more than 100,000 students across five universities in three states. The Link University City is located in Pennsylvania, while Latitude on Hillsborough and Uncommon Wilmington are in North Carolina, and Latitude at Kent is in Ohio. Ascott established a development venture, SAVE, in February 2022 with total committed equity of US$150 million (S$204.8 million) to develop student accommodation assets in the USA. Ascott will manage the venture and hold a 20% stake in the joint venture while the remaining stake will be held by Riyad Capital. Riyad Capital is one of the largest institutional capital partners in theMiddle East and an existing partner from Ascott’s network of lodging property owners. SAVE’s first investment is a 779-bed Class A freehold student accommodation development asset in Nebraska, expected to complete by August 2023. In March 2022, ART announced the acquisition of its first student accommodation property in Japan. Located in Osaka, it serves the main campus of the prestigious Kindai University, which is just a two- minute walk away. Kindai University has over 30,000 undergraduate students. Rental Housing Ascott has also grown its rental housing portfolio in Japan through ART – three properties in Sapporo were acquired in June 2021 and the turnkey acquisition of four properties in Osaka and Fukuoka is slated to complete between 4Q 2022 to 2Q 2023. FY 2021 Performance Review BUSINESS PERFORMANCE Paloma West Midtown is Ascott’s first student accommodation property acquired through its hospitality trust, Ascott Residence Trust, in February 2021. 1 Comprises Ascott’s and ART’s investment in the initial 90% stake, estimated costs of the additional 10%which Ascott and ART will acquire at fair market valuation and other deal-related expenses. Artist impression of SAVE’s first investment in a Class A freehold student accommodation development asset in Lincoln, Nebraska, USA. Annual Report 2021 43 CapitaLand Investment Limited 42