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In a recent development, CapitaLand Ascott Trust (CLAS) has announced the successful acquisition of two freehold limited-service hotels in Japan for a total of JPY21 billion ($178.5 million). The two hotels, namely, ibis Styles Tokyo Ginza in the country’s capital and Chisun Budget Kanazawa Ekimae in Kanazawa, were secured at a discounted rate of 8.3% below their independent valuation.
With a projected completion in 2024, the acquisition is expected to add a distribution per stapled security (DPS) accretion of 1.6% on a FY2024 pro forma basis. Furthermore, the blended net operating income (NOI) yield for the two hotels stands at a promising 4.3% in FY2024. The acquisition was efficiently funded through a combination of JPY-denominated debt and proceeds from the divestment of four properties previously owned by CLAS in Japan, aligning with the company’s strategy to mitigate currency fluctuations.
The ibis Styles Tokyo Ginza hotel is situated in the bustling shopping and entertainment district of the capital city. With 224 well-appointed units, the hotel is conveniently located near popular attractions such as Ginza Six, a high-end retail mall, and the famous Uniqlo flagship store. Guests can also easily access the iconic Ginza Wako clock tower within a short 10-minute walk.
Meanwhile, the 392-unit Chisun Budget Kanazawa Ekimae is located in Kanazawa, a city in the northwest of Japan renowned for its rich cultural heritage and traditional gardens. Similar to Kyoto, the city boasts tourist hotspots such as Kanazawa Castle, Kenrokuen Garden, and historic geisha and samurai districts, making it an ideal location for leisure and business travelers alike.
The recent acquisitions of ibis Styles Tokyo Ginza and Chisun Budget Kanazawa Ekimae mark a total investment value of approximately $530 million for CLAS in the past 12 months. These purchases offer higher yields compared to the four properties divested, consequently boosting the company’s income distribution.
Other notable acquisitions by CLAS in 2024 include the Teriha Ocean Stage, a rental housing property in Fukuoka, Japan, and the complete acquisition of the Standard at Columbia, a student accommodation property in the United States. In addition, CLAS also completed the purchase of the lyf Funan Singapore in December 2024. On the divestment front, the company successfully sold properties worth over $500 million in 2024, generating a net gain of approximately $74 million.
Serena Teo, CEO of CLAS’ manager, expressed her satisfaction with the recent acquisition, stating that it aligns with the company’s portfolio reconstitution strategy to enhance the quality of its assets and deliver consistent returns to its Stapled Securityholders. She further added, “The FY2024 NOI yield for 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 reinvesting the proceeds from these divestments into higher-yielding assets, we have effectively replaced the income from the four properties that were sold.”
As of now, CapitaLand Ascott Trust’s unit price stands at a healthy 90 cents per unit.…