CAPITALAND Ascott Trust (Clas) has acquired two freehold limited-service hotels in Japan – ibis Styles Tokyo Ginza and Chisun Budget Kanazawa Ekimae – for 21 billion yen (S$178.5 million).
The acquisition is part of Clas’ portfolio reconstitution strategy to enhance the quality of its portfolio and deliver stable returns to its stapled securityholders, said Serena Teo, chief executive of its managers (CapitaLand Ascott Trust Management and CapitaLand Ascott Business Trust Management) on Friday (Jan 31).
The deal is priced at an 8.3 per cent discount to independent valuation, and has a distribution per stapled security accretion of 1.6 per cent on a FY2024 pro forma basis. Meanwhile, the blended net operating income (NOI) yield of the acquisition is 4.3 per cent in FY2024.
The purchase was funded by yen-denominated debt, as well as the proceeds from Clas’ divestment of four properties in Japan, adopting a natural hedge against currency fluctuations.
It divested Infini Garden, a rental housing property in Fukuoka, and three hotels in Osaka – Hotel WBF Honmachi, Hotel WBF Kitasemba East and Hotel WBF Kitasemba West.
Teo noted that the FY2024 NOI yield of the two hotels is 230 basis points higher than the blended exit yield of about 2 per cent for the four previous divestments in Japan.
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She said: “By swiftly redeploying divestment proceeds into these higher-yielding assets, we have fully replaced the income from the four divested properties. Clas continues to focus on delivering growth by ensuring our portfolio is well-positioned to capture lodging demand.”
Its managers anticipate strong demand for the newly acquired hotels in Japan, due to their prime locations.
The 224-unit ibis Styles Tokyo Ginza is situated in the capital’s premium shopping and entertainment district. Meanwhile, the 392-unit Chisun Budget Kanazawa Ekimae is just a 10-minute drive from the historical city’s central business district, as well as major event and sports venues.
Following the recent acquisition, 18 per cent of Clas’ total assets are located in Japan. Its Japan portfolio now comprises two serviced residences, four hotels, 23 rental housing properties and a student accommodation property.
In FY2024, Clas’ Japan properties achieved the strongest performance among its key markets, with revenue per available unit for its serviced residences and hotels there growing 37 per cent year on year to 23,987 yen in the fourth quarter of 2024.
Over the past 12 months, Clas has made investments totalling about S$530 million. This includes the recent purchase of ibis Styles Tokyo Ginza and Chisun Budget Kanazawa Ekimae.
These acquisitions offer higher yields than Clas’ divestments, boosting its income distribution, it noted.
Stapled securities of Clas ended flat at S$0.895 on Friday.
