ACROPHYTE Annual Report 2024 HOSPITALITY TRUST HEIGHTS NEW
ACROPHYTE a plant that grows at high altitude
CONTENTS OVERVIEW Vision, Mission, and Corporate Profile 3 Trust Structure 4 Hotel Segment 6 Hotel Portfolio 8 Our Brands 9 Diversified Portfolio 10 Portfolio List 12 Portfolio Optimisation and Asset Enhancements 16 Portfolio Gallery 18 FY2024 Performance snapshot 24 Financial Summary 26 Letter to Stapled Securityholders 28 OUR PEOPLE Board of Directors 34 Management Team 37 PERFORMANCE REVIEW Operational Review 42 Financial Review 45 Investor Relations 48 REPORTS Corporate Governance Report 52 Statement of Policies and Practices 80 Statement on Composition of the Board of Directors 87 Risk Management 88 Financial Statements 91 Statistics of Stapled Securityholdings 177 Additional Information 179 Corporate Directory 184 1
Overview 2
OUR MISSION THE MANAGERS CORPORATE PROFILE Listed on the Singapore Exchange on 9 May 2019, Acrophyte Hospitality Trust (formerly known as ARA US Hospitality Trust) (“ACRO-HT”) is a hospitality stapled group comprising Acrophyte Hospitality Property Trust (formerly known as ARA US Hospitality Property Trust) (“ACRO-REIT”) and Acrophyte Hospitality Management Trust (formerly known as ARA US Hospitality Management Trust) (“ACRO-BT”). ACRO-HT invests in income-producing real estate assets used primarily for hospitality and/or hospitality-related purposes located in the United States (“U.S.”). Its portfolio currently comprises 33 upscale select-service hotels with a total of 4,315 rooms across 17 states in the U.S (the “Portfolio”). ACRO-HT has a market capitalization of US$116 million as at 31 December 2024. For more information, please visit www.acrophytetrust.com ACRO-HT is managed by Acrophyte Hospitality Trust Management Pte. Ltd. (formerly known as ARA Trust Management (USH) Pte. Ltd. ) (“REIT-Manager”) and Acrophyte Hospitality Business Trust Management Pte. Ltd. (formerly known as ARA Business Trust Management (USH) Pte. Ltd.) (“Trustee-Manager”), collectively known as the (“Managers”). The Managers are wholly-owned subsidiaries of Acrophyte Asset Management Pte. Ltd. (“Acrophyte AM”). Acrophyte AM is a wholly-owned subsidiary of Acrophyte Pte. Ltd. (“Acrophyte”), the sponsor of ACRO-HT. Acrophyte (formerly known as Chip Eng Seng Corporation Ltd.) is a multinational conglomerate company with businesses in property development and investment, construction (building construction, civil infrastructure, environmental and sustainability, prefabrication technology and procurement), hospitality, as well as education. To provide sustainable and stable returns to our Stapled Securityholders through attractive distributions and long-term capital appreciation. VISION, MISSION, AND CORPORATE PROFILE 3
Stapled Acrophyte Hospitality Trust’s companies The Managers of ACRO-HT (including wholly-owned subsidiary of REIT Manager) and REIT Trustee 3rd party service providers Institutional and retail investors Master Lease Agreement Hotel Manager ACRO-BT ACRO-REIT Provides management Services Provides management services and acts on behalf of ACRO-BT Securityholder Loans OpCo4or Master Lessee PropCos4 U.S. REIT2 Hotel Management Agreement Singapore USA Cayman Co or Loan Subsidiary SingCo Portfolio Stapled Securityholders1 Acts on behalf of ACRO-REIT Securityholder Cayman Islands Third Party Hotel Managers Hotel Management Agreements Hyatt / Marriott / Hilton Franchise Agreements Acrophyte Hospitality Trust U.S. Partnership3 REIT Trustee (DBS Trustee Limited) Trustee-Manager (Acrophyte Hospitality Business Trust Management Pte. Ltd.) 1. Please refer to the section “Important Notice Regarding the Ownership of Stapled Securities” in the Prospectus 2. ARA USH REIT, Inc qualified as a real estate investment trust for U.S. federal income tax purpose ("U.S. REIT") for the year 2024. A U.S. REIT is not subjected to U.S. federal income tax on its net income distributed as dividends. 3. U.S. Partnership is an investment holding entity which holds 100% of interest in the portfolio via the PropCos. 4. “PropCos” refers to U.S. entities established to hold the properties in the portfolio, while “Opco” refers to U.S. entities established to own the operational assets of the properties in the portfolio. Manager US Sub (Acrophyte Hospitality Management, Inc) REIT Manager (Acrophyte Hospitality Trust Management Pte. Ltd.) TRUST STRUCTURE 4
ACROPHYTE HOSPITALITY TRUST ACRO-HT is a stapled group comprising ACRO-REIT and ACRO-BT. ACRO-REIT is set up to hold the underlying hotels. ACRO-BT is an active business trust set up to own the operational assets of the hotels. ACRO-BT extends loans to the hotel holding companies to facilitate the repatriation of cashflows to Singapore. ACRO-HT has engaged ARA US Hospitality Management, Inc. (“Hotel Manager”) to oversee the operations and management of the portfolio in the capacity of an asset manager. The Hotel Manager uses third-party hotel operators for direct, day-to-day operations of the hotels. As the asset manager, the Hotel Manager manages the hotel operators (i.e., Aimbridge Hospitality, Avion Hospitality, Concord Hospitality and Chartwell Hospitality) on behalf of ACRO-HT. Hyatt Hotels Corporation (“Hyatt”), Marriott International (“Marriott”) and Hilton Worldwide (“Hilton”) are franchisers that extend the various brands to the Portfolio. AC Hotel Raleigh North Hills 5
The U.S. hospitality market is the largest in the world with over 5.7 million rooms as at the end of FY2024, with over 70% of the industry supply-branded and characterised into full-service, select-service and limited-service segments. The hotel brands can also be classified under the chain scale by price levels. ACRO-HT is focused on owning and operating premium-branded hotels in the upscale, selectservice sector with efficient operating models in the U.S. The hotels are operating under the franchise of three of the world’s largest hotel chains, Hyatt, Marriott and Hilton. Hyatt House Boston Burlington HOTEL SEGMENT 6
Additional Information on the Master Lease Agreements1 In FY2024, all the hotels owned by ACRO-REIT were leased to any of the three master lessees, namely ARA USH Chicago Tenant, LLC, ARA USH Blue Runner Tenant, LLC, or ARA CS Tenant, LLC, all of which are wholly- owned subsidiaries of ACRO-BT. Tenant Industry Percentage of Revenue in FY2024 Lease Expiry2 ARA USH Chicago Tenant, LLC Hospitality 83.7% 31 December 2024 ARA USH Blue Runner Tenant, LLC Hospitality 13.0% 16 January 2025 ARA CS Tenant, LLC Hospitality 3.3% 30 April 2028 1 All master lease agreements of ACRO-HT are internal master lease agreements between ACRO-REIT and ACRO-BT within ACRO-HT. 2 As ACRO-REIT owns the hotels, while ACRO-BT is the master lessee which manages and operates these hotels, it is expected that the master leases will be renewed as long as ACRO-REIT and ACRO-BT remain stapled. The leases have been renewed for another 5 years, with the lease to ARA USH Chicago LLC expiring on 31 December 2029, and the lease to ARA USH Blue Runner Tenant LLC expiring on 16 January 2030. With the master lease renewals, the Weighted Average Lease Expiry (“WALE”) is now extended to 4.95 years. Hotel Segment Attributes Our hotels operate in the upscale select-service segment Luxury Full-Service Select-Service Upper Upscale Economy Independent Not affiliated with Brand Limited-Service • 100% rooms • revenue • Few facilities and • amenities • Lowest operating • costs • Minimal labour force Upscale Upper Midscale Midscale • 90-95% rooms revenue • Selected facilities which include reduced F&B offerings and smaller meeting places • Optimal operational efficiency at smaller room inventory with lower operational costs • Smaller and flexible labour force • 50-75% rooms revenue • Expansive facilities with full array of services and amenities at high service levels • Higher operational costs • Larger fixed labour force FULL-SERVICE SELECT-SERVICE LIMITED-SERVICE 7
Upscale select-service hotels 33 Valuation as at 31 December 2024 USD 728 MIL Rooms 4,315 States Freehold Title 17 > 90% AC Hotel Raleigh North Hills HOTEL PORTFOLIO 8 The various brands within our Portfolio include Hyatt House, Hyatt Place, AC Hotels by Marriott, Courtyard by Marriott, Residence Inn by Marriott and Home2 Suites by Hilton Worldwide. As disclosed in the prospectus dated 2 May 2019 for the initial public offering (“IPO”) of ACRO-HT (formerly known as ARA US Hospitality Trust), the initial portfolio of 38 properties were at the time of IPO already held by ACRO-HT and the deemed purchase price was US$695 million on a portfolio basis. Of the 38 properties, 6 properties, Hyatt Place Chicago Itasca, Hyatt Place Pittsburgh Cranberry, Hyatt Place Birmingham Inverness, Hyatt Place Cincinnati Northeast and Hyatt Place Cleveland Independence, were disposed of in FY2022 and Hyatt Place Oklahoma City Airport were disposed of in FY2023. In addition, Hyatt Place Pittsburgh Airport, Hyatt House Philadelphia Plymouth Meeting and Hyatt House Shelton were disposed of in FY2024. Presently, only 29 of the IPO properties are currently held by ACRO-HT (of which 20 hotels are branded under “Hyatt Place” branding while 9 hotels are branded under “Hyatt House”). The portfolio of Marriott-branded hotels, namely the AC by Marriott Raleigh North Hills, Courtyard San Antonio Six Flags® at The RIM and the Residence Inn San Antonio Six Flags® at The RIM, were acquired on 17 January 2020 for a total consideration of US$84 million. Home2 Suites by Hilton Colorado Springs South was acquired on 18 April 2023 for a total consideration of US$29 million.
ACRO-HT has a diversified portfolio of 33 quality assets, comprising a total of 4,315 hotel rooms across 17 states in the U.S. It offers investors the opportunity to invest in the upscale-select service hospitality sector in key U.S. growth regions, providing an efficient tax structure to access the world’s largest lodging market. Hyatt House hotels are upscale, extended-stay accommodations offering apartment-style rooms with kitchenettes and spacious living areas, catering to both business and leisure travelers. These hotels typically achieve higher occupancy and hold a slight premium in average daily rate (“ADR”) over Hyatt Place hotels due to their extended-stay focus and larger room offerings. AC Hotels by Marriott are upscale select-service hotels that blend European-inspired design with modern amenities, catering to both business and leisure travelers. The AC Hotel Raleigh North Hills, located in Raleigh’s vibrant North Hills neighborhood, offers a stylish, comfortable stay with easy access to shopping, dining, and entertainment. The Hotel Manager oversees four third-party hotel operators who manage day-to-day hotel operations on behalf of the Trust. Hyatt Place hotels provide upscale, select-service accommodations with spacious rooms, a 24/7 Gallery Menu, and a Coffee to Cocktails Bar. They cater to business and leisure travelers, families, and small events, and are typically located in urban, airport, and suburban areas. Courtyard by Marriott hotels offers upscale, select-service accommodations for both business and leisure travelers, providing a comfortable, sophisticated environment with flexible workspaces and thoughtful amenities. The Courtyard San Antonio Six Flags® at The RIM features modern spaces with plush bedding, well-lit work areas, and free Wi-Fi, making it ideal for work and relaxation. Home2 Suites by Hilton is a rapidly growing extended-stay hotel brand offering stylish, flexible accommodations with pet-friendly amenities, environmentally conscious operations, and a range of services like free breakfast, Wi-Fi, fitness areas, and community spaces for both business and leisure travelers. Residence Inn by Marriott is an upscale extended-stay hotel offering spacious suites with fully equipped kitchens, designed for both business and leisure travelers. Courtyard San Antonio Six Flags® at The RIM is conveniently located near shopping, dining, and entertainment at The RIM Shopping Center. PREMIER INTERNATIONAL HOTEL BRANDS 4 ESTABLISHED OPERATORS OUR BRANDS 9
California New Mexico Colorado Nebraska Idaho Texas Sacramento Rancho Cordova Albuquerque Airport Boise Towne Square Denver Airport Colorado Springs South Omaha Downtown Old Market San Antonio Six Flags®at The Rim Legend AC Hotels by Marriott Courtyard by Marriott Hyatt Place Residence Inn by Marriott Home2 Suites by Hilton Hyatt House 1 1 2 1 1 2 DIVERSIFIED PORTFOLIO 10
braska Florida Georgia Kentucky Michigan Tennessee North Carolina Virginia New York Massachusetts Connecticut New Jersey maha owntown d Market • Detroit Auburn Hills • Detroit Livonia • Lakeland Center • Tampa Busch Gardens • Atlanta Alpharetta Windward Parkway • Atlanta Norcross Peachtree • Nashville Brentwood • Memphis Primacy Parkway • Nashville Opryland • Cincinnati Airport Florence • Louisville East Fishkill Boston Burlington Richmond Arboretum Mystic • Richmond West • Sterling Dulles Airport North Secaucus Meadowlands • Branchburg • Morristown • Parsippany-East • Parsippany Whippany Charlotte Airport Tyvola Road Raleigh North Hills Raleigh Durham Airport 1 2 2 2 2 3 3 3 1 1 1 5 11
State City Brand Name of Hotel Hyatt Portfolio Massachusetts Burlington Hyatt House Hyatt House Boston Burlington New Jersey Branchburg Hyatt House Hyatt House Branchburg New York Fishkill Hyatt House Hyatt House Fishkill New Jersey Morristown Hyatt House Hyatt House Morristown New Jersey Parsippany Hyatt House Hyatt House Parsippany-East New Jersey Whippany Hyatt House Hyatt House Parsippany Whippany North Carolina Morrisville Hyatt House Hyatt House Raleigh Durham Airport Virginia Henrico Hyatt House Hyatt House Richmond Short Pump Virginia Sterling Hyatt House Hyatt House Sterling Dulles Airport North New Mexico Albuquerque Hyatt Place Hyatt Place Albuquerque Airport Georgia Alpharetta Hyatt Place Hyatt Place Atlanta Alpharetta Windward Parkway Georgia Norcross Hyatt Place Hyatt Place Atlanta Norcross Peachtree Idaho Boise Hyatt Place Hyatt Place Boise Towne Square North Carolina Charlotte Hyatt Place Hyatt Place Charlotte Airport Billy Graham Parkway Kentucky Florence Hyatt Place Hyatt Place Cincinnati Airport Florence Colorado Aurora Hyatt Place Hyatt Place Denver Airport (1) Valuation as at 31 December 2024 PORTFOLIO LIST 12
Number of Rooms Land Tenure Year of Last Renovation Valuation1 (USD $mil) Revenue (USD $mil) Occupancy Rate 150 Freehold 2016 40.5 $8.4 83.2% 139 Freehold 2016 23.6 $5.6 77.8% 135 Freehold 2016 22.4 $5.8 74.7% 132 Freehold 2016 30.9 $6.4 74.4% 140 Freehold 2015 17.4 $5.5 73.4% 135 Freehold 2016 21.0 $6.2 79.2% 141 Freehold 2017 19.5 $5.3 76.7% 134 Freehold 2023 29.6 $5.9 71.9% 162 Freehold 2016 23.7 $5.1 71.0% 127 Freehold 2016 16.0 $4.2 70.2% 127 Freehold 2016 10.2 $2.1 47.4% 126 Freehold 2016 11.2 $2.5 53.9% 127 Freehold 2015 20.6 $4.0 65.4% 127 Freehold 2016 16.7 $4.7 85.8% 126 Freehold 2017 19.4 $4.2 76.2% 126 Freehold 2016 17.3 $4.0 64.7% 13
State City Brand Name of Hotel Hyatt Portfolio (continued) Michigan Auburn Hills Hyatt Place Hyatt Place Detroit Auburn Hills Michigan Livonia Hyatt Place Hyatt Place Detroit Livonia Florida Lakeland Hyatt Place Hyatt Place Lakeland Center Kentucky Louisville Hyatt Place Hyatt Place Louisville East Tennessee Memphis Hyatt Place Hyatt Place Memphis Primacy Parkway Connecticut Mystic Hyatt Place Hyatt Place Mystic Tennessee Brentwood Hyatt Place Hyatt Place Nashville Brentwood Tennessee Nashville Hyatt Place Hyatt Place Nashville Opryland Nebraska Omaha Hyatt Place Hyatt Place Omaha Downtown Old Market Virginia Richmond Hyatt Place Hyatt Place Richmond Arboretum California Sacramento Hyatt Place Hyatt Place Sacramento Rancho Cordova New Jersey Secaucus Hyatt Place Hyatt Place Secaucus Meadowlands Florida Tampa Hyatt Place Hyatt Place Tampa Busch Gardens Marriott Portfolio5 North Carolina Raleigh AC by Marriott AC by Marriott Raleigh North Hills Texas San Antonio Courtyard by Marriott Courtyard San Antonio Six Flags® at The RIM Texas San Antonio Residence Inn by Marriott Residence Inn San Antonio Six Flags® at The RIM Hilton Portfolio6 Colorado Colorado Springs Home2 Suites Home2 Suites by Hilton Colorado Springs South (1) Valuation as at 31 December 2024 (2) 75 year leasehold expiring in July 2073, with a remaining lease term of 49 years. This assumes that ACRO-HT exercises its right to renew the initial lease for each property at the same terms upon the expiry of the initial lease in 2023 for five consecutive years of 10 years each. (3) 75 year leasehold expiring in July 2071, with remaining lease term of 47 years. This assumes that ACRO-HT exercises its right to renew the current lease for each property on the same terms upon the expiry of the current lease in 2021 for five consecutive terms of 10 years each. (4) The hotel commenced operations in 2019. (5) On January 17, 2020, the AC by Marriott Raleigh North Hills was acquired for $43.0 million, the Courtyard San Antonio Six Flags® at the RIM was acquired for $21.8 million, and the Residence Inn San Antonio Six Flags® at the RIM was acquired for $19.3 million. (6) On 18 April 2023, Home2 Suites by Hilton Colorado Springs South was acquired for US$29.0 million. 14
Number of Rooms Land Tenure Year of Last Renovation Valuation1 (USD $mil) Revenue (USD $mil) Occupancy Rate 127 Freehold 2016 7.0 $2.4 46.4% 127 Freehold 2016 10.8 $3.3 61.9% 127 Leasehold2 2024 22.9 $4.9 66.3% 121 Freehold 2016 14.6 $3.3 62.4% 126 Freehold 2016 9.0 $2.7 52.2% 79 Freehold 2024 17.5 $4.4 75.9% 124 Freehold 2015 16.4 $3.2 56.9% 123 Freehold 2016 22.4 $4.9 66.2% 159 Freehold 2024 35.2 $5.8 65.6% 127 Freehold 2016 13.7 $3.4 56.5% 127 Freehold 2024 21.2 $4.1 67.5% 159 Leasehold3 2024 30.9 $7.2 65.7% 126 Freehold 2024 21.4 $4.9 69.6% 135 Freehold 2024 63.8 $11.9 78.1% 124 Freehold 2017 24.2 $5.1 73.4% 131 Freehold 2017 23.9 $4.9 74.9% 119 Freehold n/a4 33.1 $5.6 80.6% 15
Portfolio Optimisation The Managers remained focused on enhancing the quality of the portfolio by reinvesting in our higher-performing assets and strategically disposing of lesser-performing assets. In FY2024, three hotels were disposed of Hyatt Place Pittsburgh Airport for US$7.7 million in March 2024, Hyatt House Philadelphia Plymouth Meeting for US$11.3 million in July 2024, and Hyatt House Shelton for US$19.7 million in October 2024. The net proceeds of the dispositions can be used to repay debt, to fund future acquisitions and/or to fund asset enhancement initiatives. Asset Enhancement Initiatives To maintain a competitive edge and adapt to evolving market demands, the Managers collaborate with the Hotel Manager to identify and pursue strategic opportunities for asset enhancement across our portfolio. In FY2024, the Managers successfully completed asset enhancement initiatives (“AEIs”) at six of its higher-performing hotels. These upgrades began in the first half of the year with the completion of AEIs at Hyatt Place Mystic, Hyatt Place Rancho Cordova, and Hyatt Place Omaha. In the latter half of the year, AEIs were successfully completed at Hyatt Place Secaucus Meadowlands, Hyatt Place Lakeland Center and Hyatt Place Tampa Busch Gardens. Energy efficiency was a top priority in these improvements. As part of our commitment to sustainability, several eco-friendly initiatives were implemented, including the installation of smart thermostats and the upgrade of hotel guest room lightings, lamps, backlit bathroom mirrors to LED lights. The renovation efforts extended to both guestrooms and hallways, which received extensive upgrades with modern interiors and furnishings designed to enhance guests’ stay experience and satisfaction. Additionally, the hotel lobbies, reception areas, and dining/bar spaces were refreshed with contemporary designs to create a vibrant and welcoming atmosphere. Exterior enhancements, including updated facades, landscaping improvements, and enhanced lighting were completed to further elevate the guest experience and create a more contemporary and inviting environment. PORTFOLIO OPTIMISATION AND ASSET ENHANCEMENTS 16
BEFORE AFTER 17
Located near major highways, the hotel provides easy access to Somerset County and key businesses such as Merck, Chubb Insurance, and Johnson & Johnson. It is also close to Diamond Nation, a sports complex that hosts 70,000 athletes each year. Located in the Hudson Valley region near the Catskill Mountains, renowned for outdoor recreation and historic sites, Dutchess County boasts a large number of film production studios, contributing $58 million annually in direct spending. The area also home to the Jehovah’s Witness headquarters, attracting leisure visitors and several meetings and conventions each year. HYATT HOUSES Hyatt House Boston Burlington, Burlington, MA Hyatt House Branchburg, Branchburgh, NJ Hyatt House Fishkill, Fishkill, NY Offering easy access to Manhattan, New York City, just 30 miles northwest via public transit, Morristown County is home to a dozen Fortune 500 companies, nearly 1,000 firms, three regional universities, and a regional medical center. Major corporations within a two-mile radius include Bayer Corporation, Novartis Pharmaceuticals, Honeywell International, and Wyndham Worldwide. Morris County is one of the strongest local economies in the New JerseyNew York-Connecticut metropolitan region. It is home to numerous Fortune 500 companies, regional universities, and a medical center. Whippany is located near major businesses such as Wyndham Worldwide, Avis Budget Group, Accenture, and IBM, and is also close to special event facilities. Morris County boasts one of the strongest local economies in the New Jersey-New York-Connecticut metropolitan region. It is home to numerous Fortune 500 companies, regional universities, and a medical center. Whippany is conveniently located near major businesses such as Wyndham Worldwide, Avis Budget Group, Accenture, and IBM, and is also close to special event facilities. Hyatt House Parsippany Whippany, Whippany, NJ Hyatt House Parsippany-East, Parsippany, NJ Hyatt House Morristown, Morristown, NJ Located 12 miles northwest of downtown Boston, the area is near major corporations such as Fuji Film, Salesforce, and Microsoft, as well as Lahey Clinic, a prominent research center. The region is also known for its biotech, life sciences, and educational institutions. PORTFOLIO GALLERY 18
The region boasts one of the fastestgrowing job markets in the U.S. and offers easy access to Washington, D.C. The hotel is near major companies such as Volkswagen, Amazon, Northrop Grumman, and Deltek, and is also close to Washington Dulles International Airport, a major transit hub. Hyatt House Sterling Dulles Airport North Sterling, VA Located 5 miles from Raleigh-Durham International Airport, in the heart of the Research Triangle, a hub for tech companies, the hotel is close to major corporations such as Lenovo, Cisco, and Amazon, as well as sports venues like the Wake Competition Center and the USA Baseball National Training Complex. It is also near top universities and healthcare institutions, including Duke University Health System and UNC REX Healthcare. Hyatt House Raleigh Durham Airport Morrisville, NC Located in Richmond’s West End, the hotel is close to restaurants, major roadways, and Virginia Commonwealth University. It is also near companies such as Capital One Financial and attracts year-round demand due to its central location in the MidAtlantic, a region popular for sports tournaments and local leisure attractions. Hyatt House Richmond / Short Pump Henrico, VA 19
HYATT PLACES Located 4 miles from Charlotte Douglas International Airport (CLT) and 5 miles from downtown Charlotte, the hotel benefits from CLT’s expansion and high demand from flight simulations and training events. Charlotte’s diverse economy includes major companies such as USAA, Lending Tree, Credit Karma, as well as the Amazon fulfillment center. Hyatt Place Charlotte Airport Billy Graham Parkway, Charlotte, NC Located minutes from Cincinnati International Airport (CVG) and 11 miles from downtown Cincinnati, the hotel benefits from CVG’s role as a major global hub for Amazon Air and DHL Aviation, with Amazon expanding its facility to 3 million square feet by 2026. The area also attracts tourists to the Ark Encounter, a Christian-themed attraction that draws over 2 million visitors annually. Hyatt Place Cincinnati Airport, Florence, Florence, KY Located less than 6 miles from Boise Airport and downtown Boise, and about 1.5 miles from Boise Town Square, Idaho’s only super-regional shopping center, the hotel is near companies such as URS Corporation, Boise Cascade LLC, and New Albertson’s Inc. It is also close to Boise State University, a key economic driver. Hyatt Place Boise Town Square Boise, ID Located less than 2 miles from Albuquerque International Airport and within five miles of key sectors such as military, medical, and education – including Kirtland Air Force Base, Presbyterian Hospital, and the University of New Mexico – the hotel is also ideally situated for the annual Albuquerque International Balloon Fiesta, which attracts over 800,000 visitors each October. Hyatt Place Albuquerque Airport, Albuquerque, NM Located 25 miles north of downtown Atlanta, in the state’s ‘Golden Corridor’, known for its diverse industries and businesses, the hotel is close to companies such as Hewlett-Packard, Verizon, and Siemens, and just minutes from a lifestyle mixed-use development featuring retail, dining, and an amphitheater, which enhances the area’s appeal. Hyatt Place Atlanta Alpharetta Windward Parkway, Alpharetta, GA Located 20 miles northeast of downtown Atlanta, in one of the U.S.’s fastest-growing counties, the hotel is near companies such as Mizuno USA, HCA Healthcare, Siemens Energy, and IBM, and is also close to an upscale shopping street and cultural center. Hyatt Place Atlanta Norcross Peachtree, Norcross, GA 20
Located near Denver International Airport and downtown Denver, within a commercial mixed-use development and just 6 miles from a new convention center, the hotel attracts demand from major office tenants such as Amazon, Sysco, and General Motors, as well as leisure and group demand from the nearby convention center. Located about 30 miles from Detroit, in a rapidly growing submarket known for its automotive industry presence, the hotel is close to the headquarters of major automobile companies such as Autoliv, BorgWarner, and Fiat-Chrysler, and is also near Oakland University. Located in Livonia, Michigan, the hotel offers easy access to corporate offices, retail, medical facilities, and educational institutions. It is near Amazon’s regional fulfillment centers, CVS Pharmacy’s distribution center, and businesses such as Panasonic, and is within five miles of Trinity Health, Laurel Park Place Mall, and major automotive companies like Toyota and General Motors. Hyatt Place Detroit Livonia Detroit, MI Hyatt Place Denver Airport, Aurora, CO Hyatt Place Detroit Auburn Hills Detroit, MI Located in Memphis, a major distribution hub and home to the headquarters of Fortune 1000 companies such as FedEx, International Paper, and AutoZone, the hotel is also close to several hospitals, making it a convenient option for both business and medical needs. Located 11.5 miles from downtown Lexington and 3.5 miles from a business park, the hotel is near key businesses such as Norton Healthcare, Citicorp, and the Federal Bureau of Investigation, as well as the UPS Worldport Hub, the world’s largest automated package facility. The hotel is also ideally situated for the Kentucky Derby, a legendary horse-racing event and major sporting attraction. Located in downtown Lakeland, a growing mid-sized MSA in Florida, the hotel is home to fulfillment centers for Amazon, Walmart, and FedEx. It is near major businesses such as Lockheed Martin and Pepperidge Farm, as well as a convention center, medical center, and sports stadium. Lakeland also hosts the Detroit Tigers’ Spring Training and various sporting events annually. Hyatt Place Lakeland Center, Lakeland, FL Hyatt Place Louisville East, Louisville, KY Hyatt Place Memphis Primacy Parkway, Memphis, TN Located 11 miles south of downtown Nashville and 13 miles from Nashville International Airport, the hotel is situated in the growing Brentwood area. It is near corporate headquarters such as AIG, AT&T, and HCA Healthcare, as well as the Cool Springs Galleria, one of Tennessee’s largest shopping malls. Located 6 miles from downtown Nashville and close to corporate businesses such as Nissan North America, CHS, and Kirkland, the hotel is minutes from the Gaylord Opryland Resort & Convention Center. It also benefits from Nashville’s vibrant music scene and tourism. Located near a historic seaport, aquarium, and the region’s largest casino – each a popular leisure destination – the hotel serves as a stopover point between New York and Boston, attracting overnight travelers. It is also conveniently located near corporate businesses such as the U.S. Naval Submarine Base, General Dynamics, and Pfizer. Hyatt Place Mystic, Mystic, CT Hyatt Place Nashville Brentwood, Brentwood, TN Hyatt Place Nashville Opryland, Nashville, TN 21
The region is home to the headquarters of 10 Fortune 1000 companies and the Fourth Circuit U.S. Court of Appeals. Corporations in close proximity include Universal Corporation, IBM, and Northrop Grumman. The hotel is also near a state-team sports training center and a sports complex that hosts major tournaments. Located 3 miles from Mather Commerce Center and Airport, one of Greater Sacramento’s largest business parks, the hotel is near corporate offices such as Accenture, Deloitte, and IBM, as well as a sports and event center that hosts various tournaments. Located in the historic Old Market District, an arts, shopping, and entertainment area, the hotel is just one mile from CenturyLink Center Omaha and top attractions such as Henry Doorly Zoo and Eppley Airfield. It is also close to corporate businesses such as Union Pacific, Berkshire Hathaway, and First National Bank of Omaha. Hyatt Place Omaha Downtown Old Market, Omaha, NE Hyatt Place Richmond Arboretum, Richmond, VA Hyatt Place Sacramento Rancho Cordova, Sacramento, CA Located 4 miles from New York City and 12 miles from Newark Liberty International Airport, the hotel is within the Harmon Meadow development. It is near attractions such as the Meadowlands Sports Complex, the American Dream retail and entertainment complex, Sea Life Aquarium, and the Nickelodeon Universe indoor amusement park and water park. Hyatt Place Secaucus Meadowlands, Secaucus, NJ Located in a fast-growing area of the Tampa MSA, the hotel is near healthcare facilities such as Shriners Hospitals for Children, Florida Hospital Tampa, and Moffitt Cancer Center. It is just 5 miles from Busch Gardens, a major leisure attraction, and close to the University of South Florida. Hyatt Place Tampa Busch Gardens, Tampa, FL 22
Located in the heart of North Hills, a premier live-work-play destination with over 1.5 million square feet of office space and major tenants such as First Citizens Bank and PwC, the area is expanding with a $1 billion Innovation District that will add office space, apartments, and a food hall. The hotel is also close to North Carolina State University, Duke University, and the University of North Carolina. Located in a prime area with residential, retail, and office spaces, the hotel is close to major highways and popular leisure attractions. It is within 30 minutes of the airport, downtown, and key corporations such as Valero, Medtronic, and United Services Automobile Association. The hotel is also near Six Flags Fiesta Texas, a popular amusement park, and the University of Texas at San Antonio. Located in a prime area with residential, retail, and office spaces, the hotel is close to major highways and popular leisure attractions. It is within 30 minutes of the airport, downtown, and key corporations such as Valero, Medtronic, and United Services Automobile Association. The hotel is also near Six Flags Fiesta Texas, a popular amusement park, and the University of Texas at San Antonio. A newly built hotel at the foothills of the Rockies, close to major corporations such as Lockheed Martin and Northrop Grumman. It is 5 miles from the U.S. Olympic and Paralympic Training Center and Museum, 2 miles from the Broadmoor World Arena, and near Fort Carson Army Base, the U.S. Air Force Academy, and the University of Colorado Springs. AC BY MARRIOTT Courtyard by Marriott Residence Inn by Marriott HOME2 SUITES HILTON For further details on our hotels, please refer to our website at www.acrophytetrust.com. AC by Marriott Raleigh North Hills, Raleigh, NC Courtyard San Antonio Six Flags® at the RIM, San Antonio, TX Residence Inn San Antonio Six Flags® at the RIM San Antonio, TX Home2 Suites by Hilton Colorado Springs South, Colorado Springs, CO 23
Occupancy Rate Average Daily Rate Revenue Per Available Room The proceeds from the sale of Hyatt Place Pittsburgh Airport for US$7.7 million and Hyatt House Philadelphia Plymouth Meeting for US$11.3 million were used to pare down existing bank borrowings. Hyatt House Shelton was sold for US$19.7 million. Net proceeds from the sale was used to either repay debt, general working capital and/or fund accretive asset enhancements in hotels within the Portfolio. Executed asset enhancement projects at six of our higher performing hotels in FY2024 to boost value and profitability. Gross Revenue Gross Operating Profit Net Property Income 68.7% US$140 US$96 US$168.8 million US$59.6 million US$44.3 million OPERATIONAL REVIEW PORTFOLIO OPTIMISATION AND ASSET ENHANCEMENT PERFORMANCE HIGHLIGHT FY2024 PERFORMANCE SNAPSHOT 24
CAPITAL MANAGEMENT1 year-on-year increase in portfolio valuation to 1 As at 31 December 2024 2 Based on 33 hotels Net Asset Value per Stapled Security Average Leverage Ratio Net Gearing Interest Coverage Ratio Average Cost of Debt Weighted Average Debt Maturity Proportion of Fixed Debt 2.2%2 USD 728 million1 US$0.73 41.6% 39.1% 1.8x 6.7% 1.5 years 47.5% VALUATION 25
78.2 130.7 169.0 175.5 168.8 FY2020 FY2021 FY2022 FY2023 FY2024 REVENUE (US$ MILLION) 24.9 41.4 47.7 44.3 FY2020 FY2021 FY2022 FY2023 FY2024 NET PROPERTY INCOME (US$ MILLION) -5.0 12.7 40.5 57.3 62.0 59.6 FY2020 FY2021 FY2022 FY2023 FY2024 GROSS OPERATING PROFIT (US$ MILLION) Nil 2.0 17.5 19.8 9.3 FY2020 FY2021 FY2022 FY2023 FY2024 DISTRIBUTABLE INCOME (US$ MILLION) Nil 0.355 3.054 3.430 1.595 FY2020 FY2021 FY2022 FY2023 FY2024 DISTRIBUTION PER STAPLED SECURITY (US CENTS) 0.62 0.70 0.80 0.74 0.73 FY2020 FY2021 FY2022 FY2023 FY2024 NET ASSET VALUE PER STAPLED SECURITY (US CENTS) FINANCIAL SUMMARY 26
1 FY2020, FY2021, FY2022, FY2023 and FY2024 comprises 41 hotels, 41 hotels, 36 hotels, 36 hotels and 33 hotels, respectively. 2 For FY2024, distributable income before retention was US$10.3 million. US$1.03 million, or 10% of the total amount available for distribution was retained for general corporate and working capital purposes. 3 Based on the closing price on the last trading day of the year. 4 The portfolio hotels are presented as Property, Plant and Equipment and measured at fair value in the financial statements of ACRO-HT in accordance with the applicable accounting standards. 5 Computed based on total debt less cash and cash equivalents over total assets less cash and cash equivalents. 6 Computation excluded interest expense on lease liabilities. It is regarded as a component of finance cost under SFRS(I)16 which is an accounting classification and does not have a bearing on debt servicing ability. The adjusted Interest Coverage Ratio (as previously defined in the Code on Collective Investment Schemes issued by the Monetary Authority of Singapore (“CIS Code”)), which has since been removed from the CIS Code effective from 28 November 2024, is the same as the reported Interest Coverage Ratio, as no hybrid securities have been issued to date. 7 In light of the elevated interest rate environment, the Monetary Authority of Singapore revised the CIS Code, effective from 28 November 2024, the minimum interest coverage ratio of 1.5 times and a single leverage ratio limit of 50% is to be applied to all REITs. For the Financial Year 2024 2023 2022 2021 2020 Revenue1 (US$ million) 168.8 175.5 169.0 130.7 78.2 Gross Operating Profit (US$ million) 59.6 62.0 57.3 40.5 12.7 Net Property Income (US$ million) 44.3 47.7 41.4 24.9 (5.0) Distributable Income2 (US$ million) 9.3 19.8 17.5 2.0 – Distribution per Stapled Security (US cents) 1.595 3.430 3.054 0.355 – Distribution Yield3 (%) 8.0% 11.2% 8.7% 0.7% – Balance Sheet as at 31 December Property, Plant and Equipment4 (US$ million) 729.4 745.0 749.3 724.5 695.2 Total Assets (US$ million) 780.9 791.8 826.4 764.1 736.4 Total Loans and Borrowings (US$ million) 323.3 325.0 325.9 338.1 354.7 Stapled Securityholders’ Funds (US$ million) 423.9 427.6 459.7 399.7 349.2 Number of Stapled Securities in issue (million) 580.1 578.2 569.2 567.3 567.3 Financial Ratios as at 31 December Net Asset Value per Stapled Security (US$) 0.73 0.74 0.80 0.70 0.62 Aggregate Leverage (%) 41.6 41.5 39.4 44.3 48.2 Net Gearing5 (%) 39.1 40.0 35.4 42.8 46.2 Interest Coverage Ratio6, 7 (x) 1.8 2.7 2.6 2.0 0.1 Proportion of Fixed Debt (%) 47.5 74.5 82.0 79.1 76.7 Weighted Average All-in Cost of Debt (%) 6.7 4.8 3.8 3.4 3.4 Weighted Average Debt Maturity (years) 1.5 2.5 1.5 2.0 3.0 27
Dear Stapled Securityholders, On behalf of the Board of the Managers of ACRO-HT, we are pleased to present the annual report of ACRO-HT for the financial year ended 31 December 2024 (“FY2024”). FY2024 has been a momentous year for ACRO-HT, marked by the acquisition of the Managers by Acrophyte Asset Management Pte. Ltd. (“Acrophyte AM”), a wholly owned subsidiary of Acrophyte Pte. Ltd. (“Acrophyte”). Both Acrophyte AM and Acrophyte are collectively referred to as the sponsor of ACRO-HT. Acrophyte is ultimately owned by Mr. Gordon Tang and Mrs. Celine Tang. Significantly, Acrophyte Limited, an entity ultimately owned by Ms. Tang Jialei and Mr. Tang Jialin, the children of Mr. Gordon Tang and Mrs. Celine Tang, acquired an 18.99% stake in the stapled securities of ACRO-HT. Following this acquisition, the Sponsor Group1 now holds a total of 28.26% of ACRO-HT’s stapled securities, pursuant to the waiver of ownership limit of 9.8% under the Trust Deeds, demonstrating a clear alignment of interest with Stapled Securityholders. A subsequent rebranding exercise in October 2024 saw ARA US Hospitality Trust renamed as Acrophyte Hospitality Trust, accentuating the integral role of ACRO-HT as part of Acrophyte’s business activities. The Sponsor is a multinational conglomerate that has capabilities across the real estate value chain and in the hospitality industry. Acrophyte also operates and invests in hospitality assets across multiple geographies, with a successful operational and investment track record. Having a committed sponsor like Acrophyte gives ACRO-HT the ability to leverage on its Sponsor’s profound expertise in the real estate sector and robust network of industry relationships. Furthermore, Acrophyte shares our confidence in the compelling value proposition and growth potential of ACRO-HT’s portfolio. OVERVIEW OF 2024 The U.S. Gross Domestic Product (“GDP”) expanded by a solid 2.8% in 2024, primarily fueled by strong consumer spending momentum, which was supported by a strong job market and wage growth that outpaced inflation. Inflation, measured by the Consumer Price Index (“CPI”) rose 3.0% for the period ending January 2025, signaling persistent inflationary pressures despite three consecutive rate cuts by the Federal Reserve in late 2024. While the Trump Administration’s actions to address trade imbalances have generated considerable market volatility, tax cuts and deregulation could stimulate economic growth. Overall, the U.S. economy continues to remain resilient, underpinned by strong consumer fundamentals that continue to drive expansion. Our Chairman, Stephen Finch & CEO, Lee Jin Yong TOWARDS NEW HORIZONS “Following this acquisition, the Sponsor Group1 now holds a total of 28.26% of ACRO-HT’s stapled securities, pursuant to the waiver of ownership limit of 9.8% under the Trust Deeds, demonstrating a clear alignment of interest with Stapled Securityholders.” “We continued to invest in our existing portfolio through strategic asset enhancement opportunities to fortify the competitive edge of our hotels.” 1 Comprising Mr. Gordon Tang, Mrs. Celine Tang, Ms. Tang Jialei and Mr. Tang Jialin LETTER TO STAPLED SECURITYHOLDERS 28
The U.S. hotel industry stabilized in 2024, with lodging demand growth trailing behind the broader performance of the U.S. economy. The resurgence of international travel, coupled with improvements in business and group travel driven by strong business investment, fueled demand for lodging and helped mitigate the softness in leisure demand. Additionally, muted new supply growth due to high construction costs and tight lending conditions, have created a favourable environment for existing hotels to maintain and improve pricing power. U.S. hotel occupancy rates remain stable at 63.0% partly due to evolved travel patterns, while average daily rate (“ADR”) and revenue per available room (“RevPAR”) posted modest growth, reaching US$158 and US$100, respectively for 2024, an increase of 1.7% and 1.8% compared to the same metrics in 2023. The U.S. lodging market outlook remains positive and stable, with slow, steady growth anticipated in the long term. According to JLL Research2, investors have increasingly gravitated towards the U.S. select-service and extended stay sector, attracted by its robust fundamental performance, lean operating model, and higher yields compared to other commercial real estate sectors. Although overall U.S. hotel investment volume declined by 13.5% in 2024 compared to 2023, mainly due to elevated cost of debt, the selectservice and extended stay hotel sector has consistently represented 50% of the country’s total hotel investment volume since 2021. Looking ahead to 2025, the sector is expected to remain a key area of interest for investors seeking strong, durable returns. PORTFOLIO PERFORMANCE ACRO-HT’s portfolio performance in FY2024 was impacted by the disposition of three hotels and the disruptions from asset enhancement initiative (“AEI”) projects at six hotels. Due to the reduction in available rooms of 4.9%, revenue declined by 3.8% to US$168.8 million compared to the previous year. Gross operating profit (“GOP” and net property income (“NPI” was lower at US$59.6 million and US$44.3 million, respectively, primarily contributed by the shortfall in revenue. Our portfolio occupancy decreased slightly by 0.6 percentage points, from 69.3% in FY2023 to 68.7% in FY2024. However, ADR rose by 1.4%, from US$138 to US$140. Through proactive asset management, our GOP margin remained stable at 35.3%. On the same-store basis, gross revenue increased by 0.2%, while NPI declined by 5.2%, primarily due to increased property insurance costs and higher hotel common area maintenance expenses. Finance costs remained elevated due to the higher interest rate environment. The total distribution (after deducting income retained for general corporate and working capital) for FY2024 was lower at US$9.3 million. Accordingly, ACRO-HT’s distribution per Stapled Security (“DPS”) for the year was 1.595 US cents. EXECUTION OF PORTFOLIO OPTIMISATION STRATEGY As part of our proactive asset management strategy, the Managers employ a bottoms-up approach to dispose from the bottom quartile of assets, particularly those in weaker markets. This multi-pronged approach aims to allocate capital efficiently to hotels with higher profitability and valuation growth potential, while also reducing debt to strengthen our balance sheet. In FY2024, we disposed of three hotels, yielding total gross proceeds of US$38.7 million. The net proceeds from the disposition of Hyatt Place Pittsburgh Airport and Hyatt House Philadelphia Plymouth Meeting, completed in March 2024 and July 2024, respectively, were used to pare down existing bank borrowings. The net proceeds from the disposition of Hyatt House Shelton, completed in October 2024, will be used to pare down debt, to fund future acquisitions and/or to fund asset enhancement initiatives. As at 31 December 2024, the ACRO-HT portfolio comprised of 33 select-service hotels with a total of 4,315 rooms across 17 states in the U.S. The portfolio value at the end of the year was US$728.0 million, an increase of 2.2% from the year before on a comparable basis3. This valuation is supported by the positive outlook for the U.S. lodging market as well as a decline in capitalization rates. Looking ahead, it is anticipated that gains in hotel operational performance over the next 12 months will be driven by ADR growth as well as contributions from the newly renovated hotels, underpinned by limited growth in hotel supply. JLL Research forecasts lower-than average supply growth in the next three years4. As hotels have a unique ability to re-set room rates on a daily basis, the lower supply growth pressure will enhance hotel’s pricing power and therefore, ultimately supporting their underlying valuations. 2 JLL Research, U.S. select-service and extended-stay hotel trends and outlook 2025, February 2025 3 Excluding the three hotels disposed in FY2024 4 JLL Research, U.S. Hotel Investment Trends, State of the Lodging Industry Year-End 2024 29
STRATEGIC ASSET ENHANCEMENTS AND INITIATIVES FOR CONTINUED SUCCESS 2024 proved to be a challenging year for acquisitions, as the U.S. hotel investment market remained competitive with a reduced volume of hotel transactions. As a result, we continued to invest in our existing portfolio through strategic asset enhancement opportunities to fortify the competitive edge of our hotels. In FY2024, we embarked on AEIs at six of our higher-performing hotels to increase longterm value and growth potential. These upgrades included extensive renovations to key areas such as the guest rooms, function rooms, lounge and lobby bar. Hyatt Place Mystic, Hyatt Place Rancho Cordova and Hyatt Place Omaha completed their AEIs in the first half of FY2024, while Hyatt Place Secaucus, Hyatt Place Lakeland Center and Hyatt Place Tampa Busch Gardens finished their enhancements in the second half of FY2024. DISCIPLINED CAPITAL MANAGEMENT We have consistently adopted a prudent capital management approach in order to provide consistent distributions to Stapled Securityholders. On 26 February 2025, we completed the refinancing of US$95.0 million of unsecured loan facilities. All debts maturing in 2025 have been refinanced and the weighted average debt maturity now stands at 2.2 years. As at 31 December 2024, interest coverage ratio stood at 1.8x, while the portfolio average leverage ratio stood at 41.6%, within the permissible aggregate leverage limit of 50%. With a cash balance of US$31.6 million, net gearing ended FY2024 at 39.1%. To date, 47.5% of ACRO-HT’s loan portfolio is hedged to fixed rates. As the hedges were done in an elevated interest rate environment, the average cost of debt was 6.7% in FY2024 compared to 4.8% in FY2023. COMMITMENT TO SUSTAINABILITY Sustainability remains a key priority as we continue to explore opportunities and initiatives to integrate sustainable practices into the management of our hotels. Through these efforts, we are committed to making a positive impact on the communities where we operate, driving sustainable business practices that benefit both the environment and society. As part of its strategic oversight, the Board has reviewed and approved the continued relevance of environmental, social and governance (“ESG”) material factors in ACRO-HT’s business and strategy formulation. The Board will continue to review and monitor the management and performance of these ESG material factors periodically, with support from the management and feedback from key stakeholders. One of our primary sustainability initiatives for FY2024 is the launch of a pilot program to implement the Symmons Evolution Water Management System (“Symmons”) at six Hyatt House locations. Symmons is a sensor-based leak detection system that provides real-time data, identifies leaks, and detects equipment malfunctions, sending instant alerts to minimize downtime, reduce utility usage, and prevent water waste. The system also ensures consistent hot water delivery to guests without raising boiler temperatures, improving energy efficiency and guest satisfaction. Additionally, we expanded successful pilot projects, such as the waste reduction program to extend the life of well-maintained furniture and the use of on-demand water heaters to lower energy consumption, to other hotels in the portfolio. As part of our ongoing commitment to sustainability, we conducted a second consecutive year of climate risk assessments in FY2024, covering 17 states across the U.S. This initiative underscored our proactive approach to climate risk, reinforcing our dedication to generating long-term value by helping the company mitigate potential disruptions, comply with regulations, and enhance business resilience. ACRO-HT’s Sustainability Report (“SR”) was prepared in accordance with the recommendations from The Task Force on Climate-related Financial Disclosures (“TCFD”) and adhere to Global Reporting Initiative (GRI) Universal Standards 2021. The FY2024 SR is scheduled to be released by the end of April 2025. LOOKING AHEAD The U.S. economic outlook for 2025 is clouded by uncertainties, primarily driven by ongoing geopolitical tensions and the changes to regulatory, immigration, trade, and tax policies. Additionally, the future trajectory of interest rates remains a key point of uncertainty, while the path of China’s economic growth continues to be a critical variable that could shape global markets. 30
In this context, the International Monetary Fund (“IMF”) has revised its U.S. GDP growth forecast for 2025 to 2.7%4, which represents an increase of 0.5 percentage points from its earlier projection in October 2024. This upward adjustment reflects a combination of positive factors, including low unemployment, rising household incomes and strong consumer spending. Additionally, the wealth effect driven by a robust bull market has significantly contributed to boosting economic activity. However, challenges remain, as inflation continues to edge upward, changes in fiscal and immigration policies could further stroke inflation in 2025. In response to these uncertainties, the U.S. Federal Reserve is taking a cautious approach before making further rate cuts. We will continue to monitor market developments closely and remain vigilant in our interest rate hedging strategy. Turning to the lodging sector, forecasts for 2025 by Smith Travel Research (“STR”) and U.S. Tourism Economics project U.S. hotel market occupancy to remain steady at 63.0%, with modest growth of 2% in ADR and RevPAR, reflecting a stable lodging market5. U.S. Tourism Economics anticipates that economic conditions would continue to support travel activity in 2025, driven by growth in anticipated business investments, which were expected to boost demand for business and group travel6. This trend would benefit our portfolio, which is orientated towards domestic transient and leisure travellers. However, these forecasts did not account for potential disruptions from policy changes, which could potentially dampen inbound travel. Despite the challenging environment, we will continue to persevere in our efforts to build a resilient portfolio. Amid the uncertain economic outlook and barring any unforeseen circumstances which may include a prolonged period of monetary status quo, we remain cautiously optimistic that the operating metrics for ACRO-HT will further strengthen in 2025. We will be nimble and proactive in our portfolio and asset management strategy to strengthen ACRO-HT’s income streams. Additionally, we will selectively consider opportunistic divestments to reduce gearing or reallocate capital into higher-yielding asset enhancement or investment opportunities that will provide stapled securityholders of ACRO-HT (“Stapled Securityholders”) with long-term accretive value. A Word of Appreciation During the year, we announced that the following Directors had stepped down from our Board of Directors: • Stepping down of Mr. Moses K Song as Non-Independent Non-Executive Director, effective 19 April 2024 • Stepping down of Ms. Stefanie Yuen Thio as Independent Non-Executive Director, Member and Chairperson of the Audit and Risk Committee, effective 3 May 2024 • Stepping down of Ms. Seow Bee Lian as Non-Independent Non-Executive Director, effective 27 May 2024 On behalf of the Board, we would like to thank Mr. Song, Ms. Yuen Thio and Ms. Seow for their contributions, guidance and invaluable insights during their term of service since the initial public offering of ACRO-HT. In closing, on behalf of the Board and Management team, we would like to express our gratitude to our Stapled Securityholders, Sponsor, Trustee, advisors and bankers for their continued trust and support. We would also like to extend our appreciation to our Board for their stewardship and wise counsel, and to our management teams in U.S. and Singapore for their contribution, dedication and hard work. Stephen Ray Finch Chairman 27 March 2025 Lee Jin Yong Chief Executive Officer 27 March 2025 4 International Monetary Fund, World Economic Outlook Update, January 2025 5 Smith Travel Research (STR), Press Release, January 2025 6 Costar and Tourism Economics, January 2025 31
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