Capitaland Ascott Trust Acquires Two Hotels Japan Jpy21 Billion
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CapitaLand Ascott Trust (CLAS) has recently made headlines with its acquisition of two limited-service hotels in Japan. These two properties, the ibis Styles Tokyo Ginza and the Chisun Budget Kanazawa Ekimae, were acquired for a total of JPY21 billion ($178.5 million). This deal was made at a discounted rate of 8.3% from the properties’ independent valuation.
The two hotels are both freehold and strategically located in popular tourist areas. The ibis Styles Tokyo Ginza is situated in the heart of the capital’s shopping and entertainment district, next to Ginza Six and the Uniqlo global flagship store. It is also a short walk away from the iconic Ginza Wako clock tower. Meanwhile, the Chisun Budget Kanazawa Ekimae is located in Kanazawa, a city known for its historical attractions and traditional gardens. Guests staying at this 392-unit hotel will have easy access to popular landmarks such as the Kanazawa Castle and Kenrokuen Garden.
CLAS’ acquisition of these two properties is expected to have a positive impact on its future financial performance. On a pro forma basis, the DPS accretion is projected to be 1.6% in FY2024. The blended NOI yield is also estimated to be 4.3% in the same year. This acquisition was funded using JPY-denominated debt and proceeds from the divestment of four properties in Japan. This move also serves as a natural hedge against currency fluctuations.
CLAS has been actively investing in overseas properties, with these recent acquisitions bringing its total investments in the past 12 months to $530 million. These properties were acquired at higher yields compared to CLAS’ divestments, thus increasing its income distribution. Some notable investments in 2024 include the Teriha Ocean Stage rental housing property in Fukuoka, the remaining 10% stake in Standard at Columbia, a student accommodation property in the United States of America, and lyf Funan Singapore.
In addition to these, CLAS also completed over $500 million in divestments in 2024, generating a net gain of approximately $74 million. CEO of CLAS’ manager, Serena Teo, explained that these acquisitions are part of their strategy to improve the quality of their portfolio and provide stable returns to their stakeholders. She also highlighted that the FY2024 NOI yield of the two hotels is considerably higher than the blended exit yield of 2.0% from the previous four divestments in Japan. This swift redeployment of divestment proceeds has allowed CLAS to fully replace the income from the divested properties.
The positive development has received support from investors, with the share price of CapitaLand Ascott Trust closing at 90 cents per unit. This is a sign of confidence in the company’s future prospects and growth potential.