CapitaLand Ascott Trust (CLAS) has announced that it will be purchasing lyf Funan Singapore from Ascott Serviced Residence Global Fund (ASRGF) for a property value of $263 million. ASRGF owns Victory SR, which holds a 100% stake in lyf Funan Singapore. The acquisition is part of CLAS’s growth strategy and is expected to have a positive impact on its future revenue.
The purchase consideration for the deal is $146.4 million, which will be largely funded by the proceeds from the divestment of Citadines Mount Sophia Singapore in March 2024. The remaining amount will be financed by a joint venture between Hong Kong-based accommodation company Weave Living and global asset manager Blackrock, who purchased the service residence on Wilkie Road for $148 million in October.
Upon completion of the acquisition, CLAS will enter into a master lease agreement with Ascott for lyf Funan Singapore. This will be subject to approval at an extraordinary general meeting scheduled for November. The initial term of the lease will be 20 years, with an option to renew for an additional five years. Under the terms of the master lease, the rent will be 93.56% of the property’s gross operating profit.
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The proposed acquisition is expected to increase CLAS’s total distribution by $3.5 million and will result in a 1.5% accretion to its distribution per stapled security (DPS) on a pro forma basis for FY2023. The ebitda yield on the acquisition is estimated to be 4.7% for FY2023.
According to CLAS, lyf Funan Singapore has maintained an average occupancy rate of over 80% in the first half of 2024. Upon completion of the transaction in the fourth quarter of 2024, CLAS will have a total of five properties in Singapore, making up 19% of its global assets.
lyf Funan Singapore is a 329-key property that opened in 2019 and caters to both short-stay and extended-stay guests. It is part of the Funan integrated development, which includes retail and office components. The property is also conveniently linked to the City Hall MRT interchange station. This acquisition is a strategic move for CLAS as it further strengthens its presence in Singapore and aligns with its focus on high-growth markets with strong potential for tourism and business activities.