Capitaland Ascott Trust Acquires Two Hotels Japan Jpy21 Billion
CapitaLand Ascott Trust (CLAS) recently acquired two freehold limited-service hotels in Japan for a total of JPY21 billion ($178.5 million). The properties, ibis Styles Tokyo Ginza and Chisun Budget Kanazawa Ekimae, are situated in prime locations in Japan’s capital city and the northwest region of the country respectively. The acquisition was priced at an 8.3% discount to independent valuation and is funded by JPY-denominated debt and proceeds from CLAS’ divestment of four properties in Japan.
The purchase of these two hotels is expected to have a positive impact on CLAS, with a projected distribution per stapled security (DPS) accretion of 1.6% on a FY2024 pro forma basis. The blended net operating income (NOI) yield for the two hotels is estimated to be 4.3% in FY2024. To mitigate currency fluctuations, CLAS opted to fund the acquisition with JPY-denominated debt, which also aligns with the local currency of the acquired properties.
Ibis Styles Tokyo Ginza is located in the bustling shopping and entertainment district of Ginza, adjacent to the popular Ginza Six retail mall and Uniqlo flagship store. The iconic Ginza Wako clock tower is also within a short walking distance from the 224-unit hotel.
Meanwhile, Chisun Budget Kanazawa Ekimae, with its 392 units, is situated in Kanazawa, a city known for its historical attractions, traditional gardens, and cultural landmarks. Kanazawa Castle, Kenrokuen Garden, and preserved geisha and samurai districts are easily accessible from the hotel.
Including these new additions, CLAS has completed investments of over $530 million in the past 12 months, all at higher yields compared to the four properties divested in Japan. These acquisitions are expected to enhance CLAS’ income distribution and further strengthen its portfolio.
In addition to the two newly acquired hotels, CLAS has completed other investments in 2024, including Teriha Ocean Stage, a rental housing property in Fukuoka, Japan; the remaining 10% stake in Standard at Columbia, a student accommodation property in the United States; and lyf Funan Singapore. These investments, coupled with over $500 million in divestments, have unlocked a net gain of $74 million for CLAS in 2024.
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According to Serena Teo, CEO of CLAS’ manager, the acquisition is in line with the company’s portfolio reconstitution strategy to improve the quality of its assets and provide stable returns to its stapled securityholders. She adds that the FY 2024 NOI yield for the two hotels is significantly higher than the blended exit yield of approximately 2.0% for the four previous divestments in Japan. By promptly reinvesting the divestment proceeds in these higher-yielding properties, CLAS has successfully replaced the income from the sold properties.
On the stock market, CapitaLand Ascott Trust closed at 90 cents per unit.