CAPITALAND Ascott Trust (Clas) has proposed to acquire Victory SR Trust (VSRT), which directly holds a 100 per cent interest in lyf Funan Singapore.
On Tuesday (Oct 1), its managers said the purchase consideration is estimated at S$146.4 million after accounting for VSRT’s net asset value (NAV) based on the property’s agreed value of S$263 million, and agreed adjustments to the NAV.
The purchase consideration is expected to be largely funded from Clas’ sale of Citadines Mount Sophia Singapore, which was completed in March 2024.
Its managers project the acquisition to increase Clas’ total distribution by S$3.5 million while keeping its gearing under 40 per cent.
Based on FY2023 pro forma estimates, the higher total distribution translates to a distribution per stapled security (DPS) accretion of 1.5 per cent, as well as an earnings before interest, taxes, depreciation and amortisation (Ebitda) yield of 4.7 per cent.
Clas said the acquisition of this property is therefore in line with the stapled group’s portfolio reconstitution strategy.
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Serena Teo, chief executive of the managers, noted that the entry Ebitda yield for lyf Funan Singapore is 150 basis points higher than the investment exit Ebitda yield of about 3.2 per cent for Citadines Mount Sophia Singapore.
“The DPS-accretive acquisition of lyf Funan Singapore will increase our presence in Singapore… Additionally, income contribution from Singapore will balance the contribution from Clas’ overseas markets,” she said.
Clas’ sponsor The Ascott Limited holds a 50 per cent stake in Ascott Serviced Residence Global Fund, which indirectly wholly owns the vendor of VSRT.
Located at 67 Hill Street at the fourth level of Funan, lyf Funan Singapore is a 329-room hotel development under Ascott’s lyf hospitality concept.
Acquiring this asset will bring Clas’ total properties in Singapore to five, and increase the proportion of its total assets in the country to 19 per cent versus 16 per cent as at end-June 2024.
Post-acquisition, Clas also intends to ink a master lease with Ascott for lyf Funan Singapore. The agreement will come with an initial term of 20 years, with the master lessee paying rent equivalent to 93.5 per cent of the property’s gross operating profit.
Completion of the deal is slated for the fourth quarter of 2024.
Both the acquisition and entry into the master lease are subject to approval from Clas’ stapled securityholders at an extraordinary general meeting scheduled to take place in November.
Stapled securities of Clas ended Monday S$0.005 or 0.5 per cent higher at S$0.975.
