CapitaLand Ascott Trust (CLAS) recently announced its acquisition of two freehold limited-service hotels in Japan for a total of JPY21 billion ($178.5 million). The two hotels, ibis Styles Tokyo Ginza located in Tokyo and Chisun Budget Kanazawa Ekimae in Kanazawa, were purchased at an 8.3% discount to their independent valuation.
The acquisition of these two hotels is expected to increase the distribution per stapled security (DPS) by 1.6% on a FY2024 pro forma basis. The blended net operating income (NOI) yield for the acquisition is estimated to be 4.3% in FY2024. The purchase was funded by JPY-denominated debt and proceeds from the divestment of four properties in Japan.
The ibis Styles Tokyo Ginza is situated in the heart of Tokyo’s shopping and entertainment district, next to the popular Ginza Six retail mall and the iconic Ginza Wako clock tower. The 224-unit hotel is also close to the well-known Uniqlo global flagship store.
In Kanazawa, the 392-unit Chisun Budget Kanazawa Ekimae offers easy access to the city’s historical attractions, traditional gardens, and cultural icons such as the Kanazawa Castle, Kenrokuen Garden, and geisha and samurai districts known for their preserved architectural designs from the Edo period.
These two acquisitions add to CLAS’ portfolio, which has seen approximately $530 million worth of investments in the past year. These acquisitions have higher yields compared to CLAS’ divestments, which have resulted in an increase in income distribution.
CLAS also completed three other acquisitions in FY2024, 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. In total, CLAS completed over $500 million in divestments in FY2024 and unlocked approximately $74 million in net gains.
Serena Teo, CEO of CLAS’ manager, commented on the acquisition, saying, “The acquisition is part of our portfolio reconstitution strategy to enhance the quality of our portfolio and deliver stable returns to our Stapled Securityholders. The FY2024 NOI yield of the two hotels is 230 basis points higher than the blended exit yield of approximately 2.0% for the four previous divestments in Japan. By swiftly redeploying divestment proceeds into these higher-yielding assets, we have fully replaced the income from the four divested properties.”
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CLAS closed at 90 cents per unit.