Capitaland Ascott Trust Acquires Two Hotels Japan Jpy21 Billion
CapitaLand Ascott Trust (CLAS) has recently acquired two limited-service hotels in Japan for a total of JPY21 billion ($178.5 million). The two hotels, namely ibis Styles Tokyo Ginza and Chisun Budget Kanazawa Ekimae, are both freehold properties. The acquisition was made at a discounted rate of 8.3% compared to the independent valuation.
The purchase is expected to be accretive to CLAS’ distribution per stapled security (DPS) by 1.6% on a pro forma basis for FY2024. The blended net operating income (NOI) yield for the acquisition is projected to be 4.3% in FY2024. To mitigate currency fluctuations, the acquisition was financed through JPY-denominated debt as well as proceeds from the recent divestment of four properties in Japan.
One of the hotels, ibis Styles Tokyo Ginza, is located in the bustling shopping and entertainment district of the capital city. With 224 units, this hotel is situated near popular retail destinations such as Ginza Six and the well-known Uniqlo flagship store. The iconic Ginza Wako clock tower is also within a 10-minute walking distance from the hotel.
Meanwhile, Chisun Budget Kanazawa Ekimae, with 392 units, is situated in Kanazawa, a city in the northwest of Japan known for its historical landmarks and cultural attractions. Guests can easily access popular destinations such as the Kanazawa Castle, Kenrokuen Garden, and traditional geisha and samurai districts, featuring well-preserved architectural designs from the Edo period.
With the addition of these two hotels, CLAS has completed investments worth approximately $530 million over the past 12 months. These acquisitions have been made at higher yields compared to the recent divestments, which will ultimately enhance CLAS’ income distribution.
Other notable acquisitions completed in 2024 include Teriha Ocean Stage, a rental housing property in Fukuoka, Japan, acquired in January 2024. In June 2024, CLAS also acquired the remaining 10% stake in Standard at Columbia, a student accommodation property in the United States. In December 2024, CLAS completed the acquisition of lyf Funan Singapore. In the same year, CLAS successfully divested properties worth over $500 million, unlocking a net gain of approximately $74 million.
Serena Teo, CEO of CLAS’ manager, says that this acquisition is part of their portfolio reconstitution strategy, aimed at improving the quality of the portfolio and providing stable returns to their Stapled Securityholders. She also adds that the estimated NOI yield for FY2024 of the two newly acquired hotels is 230 basis points higher than the blended exit yield of approximately 2.0% for the previous four divested properties in Japan. Teo emphasizes that by quickly reinvesting the proceeds from the divestments into higher-yielding assets, they have been able to fully replace the income from the four divested properties.
The Jurong Lake District, which is envisioned as Singapore’s second Central Business District (CBD), is strategically situated in close proximity to Clementi. As part of the URA Master Plan, this district is set to undergo significant developments that will transform it into a bustling commercial and residential hub. The convenient location of Elta Condo near the Jurong Lake District will offer residents convenient access to a plethora of job opportunities and business services. Plus, with the Elta Showflat nearby, potential residents can easily explore and discover the benefits of living in such an up-and-coming area.
On the stock market, CapitaLand Ascott Trust closed at 90 cents per unit.