CapitaLand Ascott Trust (CLAS) has acquired two freehold limited-service hotels in Japan for a total of JPY21 billion (S$178 million). 

Acquisition yield at 4.3% is higher than blended exit yield of about 2% for four divested properties in Japan

The two hotels are ibis Styles Tokyo Ginza located in the country’s capital and Chisun Budget Kanazawa Ekimae situated in Kanazawa, one of the top tourist destinations amongst domestic travellers in Japan.  The acquisition is priced at an 8.3% discount to independent valuation .

On a FY 2024 pro forma basis, the acquisition of the two hotels has a Distribution per Stapled Security (DPS) accretion of 1.6%.  The blended net operating income (NOI) yield of the acquisition is 4.3% in FY 2024.  Adopting a natural hedge against currency fluctuations, the acquisition was funded by JPY-denominated debt and proceeds from CLAS’ divestment of four properties in Japan.

Ms Serena Teo, Chief Executive Officer of CapitaLand Ascott Trust Management Limited and CapitaLand Ascott Business Trust Management Pte. Ltd. (the Managers of CLAS), said: “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.  CLAS continues to focus on delivering growth by ensuring our portfolio is well-positioned to capture lodging demand.”

“Japan is a key market for us.  Post-acquisition, 18% of CLAS’ total assets are located in the country.  With Japan continuing to enjoy strong international travel demand, the two well-located properties are poised to capture the demand from travellers visiting Tokyo and Kanazawa.  Visitors staying in Tokyo and Kanazawa have already surpassed pre-COVID levels by 23% and 12% respectively.  The revenue per available room for both Ginza and Kanazawa markets are also set to continue on an upward trajectory.  The properties will be under management contracts, enabling CLAS to benefit from income upside.  Through our diversified portfolio of assets with different contract types, we have a mix of stable and growth income sources that enable us to deliver resilient long-term value for our Stapled Securityholders,” added Ms Teo.