CapitaLand Ascott Trust (CLAS) has recently acquired two limited-service hotels in Japan for a total of JPY21 billion ($178.5 million). These two properties, ibis Styles Tokyo Ginza and Chisun Budget Kanazawa Ekimae, are both freehold and offer great potential for investment. The purchase was made at a discount of 8.3% compared to their independent valuation.
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The acquisition of these two hotels is expected to bring in positive results for CLAS, with a projected distribution per stapled security (DPS) accretion of 1.6% on a pro forma basis for FY2024. In addition, the blended net operating income (NOI) yield for these properties is estimated to be 4.3% in FY2024. To further mitigate any risks, the acquisition was financed through JPY-denominated debt and proceeds from the divestment of four properties within Japan.
ibis Styles Tokyo Ginza, located in the bustling capital city, is situated in the heart of the shopping and entertainment district. With its prime location, guests have easy access to popular high-end retail malls such as Ginza Six and the well-known Uniqlo flagship store. The hotel is also just a short walk away from the iconic Ginza Wako clock tower, a popular landmark in the district.
For those looking to invest in overseas properties, CLAS offers a wide range of projects available for sale around the world.
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Chisun Budget Kanazawa Ekimae, boasting 392 units, is located in Kanazawa, a city in the northwest of Japan. This city, similar to Kyoto, is known for its historical attractions, traditional landscaped gardens, and cultural icons. Guests staying at this property can easily access popular sites such as Kanazawa Castle, Kenrokuen Garden, and heritage geisha and samurai districts, each showcasing the unique architectural designs of Japan’s Edo period.
Including the two recently acquired hotels, CLAS has invested approximately $530 million in the last 12 months alone. These investments offer higher yields compared to the four divestments made by CLAS, ultimately boosting the trust’s income distribution.
Among the investments made in 2024 were Teriha Ocean Stage, a rental housing property in Fukuoka, Japan, Standard at Columbia, a student accommodation property in the United States of America, and lyf Funan Singapore. Last year also saw the completion of over $500 million in divestments, resulting in a net gain of about $74 million.
Serena Teo, CEO of CLAS’ manager, states, “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 FY 2024 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.”
As of the most recent closing, CapitaLand Ascott Trust was trading at 90 cents per unit.