CapitaLand Ascott returns boosted by acquisitions in Japan

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CapitaLand Ascott Trust (CLAS) announced its acquisition of two freehold limited-service hotels in Japan for an approximate total of SG$178.5 million on Friday, 31st January.  

The two hotels are ibis Styles Tokyo Ginza and Chisun Budget Kanazawa Ekimae in Kanazawa, one of the most popular destinations for local travellers.

On a FY 2024 pro forma basis, the acquisition of the two hotels has a Distribution per Stapled Security (DPS) accretion of 1.6 percent.  

The blended net operating income (NOI) yield of the acquisition is 4.3 percent 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.

Keeping tabs on a vital market

CapitaLand Ascott Trust Management Limited and Ascott Business Trust Management Pte Ltd CEO Serena Teo said of the acquisition: “Japan is a key market for us.  Post-acquisition, 18 percent 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 percent and 12 percent 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.”

Teo further explained that the acquisition is part of the company’s portfolio reconstitution strategy to enhance the quality of its portfolio and deliver stable returns to Stapled Securityholders.  

She added that the FY 2024 NOI yield of the two hotels is 230 basis points higher than the blended exit yield of approximately 2.0 percent. for the four previous divestments in Japan.  

She concluded by saying: “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.”

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