CapitaLand Ascott Trust (CLAS) has recently announced its plans to acquire lyf Funan Singapore, a serviced residence, from Ascott Serviced Residence Global Fund (ASRGF) at a property value of $263 million. ASRGF, the current owner of Victory SR which holds a 100% interest in lyf Funan Singapore, will be selling the property to CLAS. The sponsor of CLAS, The Ascott Limited, holds a 50% stake in ASRGF.
In a press release dated October 1, CLAS stated that the purchase consideration for this deal will amount to $146.4 million and will be primarily financed through the proceeds from the divestment of Citadines Mount Sophia Singapore, which was completed in March 2024. It was also mentioned that a joint venture consisting of Hong Kong-based accommodation company Weave Living and global asset manager Blackrock had previously purchased the serviced residence on Wilkie Road for $148 million.
Upon completion of this acquisition, CLAS will enter into a master lease agreement with Ascott for lyf Funan Singapore, subject to approval at an extraordinary general meeting scheduled in November. This 20-year master lease can also be renewed for an additional five years. The rent to be paid by the master lessee will amount to 93.56% of the property’s gross operating profit.
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CLAS expects this proposed acquisition to increase its total distribution by $3.5 million, resulting in a 1.5% increase in its distribution per stapled security (DPS) on a pro forma basis for FY2023. The proposed acquisition also boasts an EBITDA yield of 4.7% on a pro forma basis for FY2023.
According to CLAS, lyf Funan Singapore has maintained an average occupancy rate of over 80% in the first half of 2024. With the completion of this transaction, expected to take place in the fourth quarter of 2024, CLAS will add lyf Funan Singapore to its portfolio of properties in Singapore, bringing the total to five and making up 19% of its worldwide assets.
The 329-key lyf Funan Singapore, which opened in 2019, caters to both short-stay and extended-stay guests. It is part of the Funan integrated development, which also includes retail and office components. The property is conveniently connected to the City Hall MRT interchange station.