CapitaLand Ascott Trust (CLAS) has recently acquired two limited-service hotels in Japan, namely the ibis Styles Tokyo Ginza and Chisun Budget Kanazawa Ekimae, for a total of JPY21 billion ($178.5 million). This purchase was made at an 8.3% discount to the properties’ independent valuation.
The acquisition is expected to have a positive impact on CLAS’ financials. On a FY2024 pro forma basis, it is estimated to contribute a 1.6% increase in distribution per stapled security (DPS). Additionally, the blended net operating income (NOI) yield for the two hotels is projected to be 4.3% in FY2024. To mitigate risks posed by currency fluctuations, the acquisition was funded through JPY-denominated debt and funds generated from the sale of four properties in Japan.
The ibis Styles Tokyo Ginza is located in the bustling shopping and entertainment district of Tokyo. With 224 units, it is situated next to popular retail mall Ginza Six and the renowned Uniqlo flagship store. The iconic Ginza Wako clock tower is also within a short walking distance.
Meanwhile, the Chisun Budget Kanazawa Ekimae boasts 392 units and is situated in Kanazawa, a city in the northwest of Japan. Similar to Kyoto, this city is famous for its historical attractions, traditional gardens, and cultural heritage sites such as the Kanazawa Castle and Kenrokuen Garden.
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Including these two acquisitions, CLAS has completed investments of approximately $530 million in the past year. These purchases were made at higher yields compared to the divestments made during the same period, resulting in a boost to CLAS’ income distribution.
In addition to these recent acquisitions, CLAS also completed other investments in 2024, such as the Teriha Ocean Stage rental housing property in Fukuoka, Japan, and the lyf Funan Singapore hotel. These investments were made at higher yields and have helped to replace the income generated from the four divested properties.
In the same year, CLAS also completed over $500 million in divestments, resulting in a net gain of around $74 million. This reflects the successful execution of CLAS’ portfolio reconstitution strategy to enhance the quality of its assets and deliver stable returns to its Stapled Securityholders.
Serena Teo, CEO of CLAS’ manager, expresses her satisfaction with the acquisitions, stating that they are in line with CLAS’ strategy to improve the overall quality of its portfolio. She also highlights the significant increase in NOI yield for the two hotels compared to the previous divestments in Japan, showcasing the successful redeployment of funds into higher-yielding assets.
As of its latest closing, CapitaLand Ascott Trust’s unit price was at 90 cents.