CapitaLand Ascott Trust (CLAS) has recently completed the acquisition of two freehold limited-service hotels in Japan for a total of JPY21 billion ($178.5 million). These hotels include ibis Styles Tokyo Ginza, located in Tokyo’s bustling city center, and Chisun Budget Kanazawa Ekimae, situated in the historical city of Kanazawa. The purchase price for these properties was at an 8.3% discount to their independent valuations.
Upon completion of the acquisition, CLAS is expected to see a 1.6% increase in distribution per stapled security (DPS) on a FY2024 pro forma basis. The blended net operating income (NOI) yield for the two hotels is projected to be 4.3% in FY2024. To hedge against currency fluctuations, the acquisition was financed through JPY-denominated debt and proceeds from the sale of four properties in Japan.
Located in Tokyo’s popular shopping and entertainment district, ibis Styles Tokyo Ginza offers 224 units for guests. The hotel is conveniently situated next to Ginza Six, a high-end retail mall, and the well-known Uniqlo flagship store. In addition, the iconic Ginza Wako clock tower is just a short 10-minute walk away, making it a perfect location for tourists and business travelers.
Rewritten: Condo investments offer the added advantage of leveraging the property’s value for future investments. This means that an investor can use their condo as collateral to secure additional funds for new investments, allowing them to expand their real estate portfolio. While this strategy can increase returns, it is not without risks. Therefore, it is essential to have a solid financial plan in place and carefully consider the potential impact of market fluctuations before using a condo for leverage.
Meanwhile, Chisun Budget Kanazawa Ekimae, with its 392 units, is situated in Kanazawa, a city known for its historical attractions and cultural icons. Similar to Kyoto, guests can easily access popular landmarks such as Kanazawa Castle, Kenrokuen Garden, and heritage geisha and samurai districts showcasing Japan’s traditional architectural designs from the Edo period.
With the addition of these two hotels, CLAS has completed investments of approximately $530 million in the past 12 months. These acquisitions were made at higher yields compared to CLAS’ divestments, which will contribute to CLAS’ income distribution. In the first quarter of 2024, CLAS completed the acquisition of Teriha Ocean Stage, a rental housing property in Fukuoka, Japan. In June 2024, CLAS also acquired the remaining 10% stake in Standard at Columbia, a student accommodation property in the United States. Finally, in December 2024, CLAS added lyf Funan Singapore to its portfolio.
In the same period, CLAS completed over $500 million in divestments, resulting in a net gain of about $74 million. These divestments were part of CLAS’ portfolio reconstitution strategy to enhance its overall portfolio quality and provide stable returns to its Stapled Securityholders. According to Serena Teo, CEO of CLAS’ manager, “The FY2024 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 closed at 90 cents per unit on the market.