CapitaLand Ascott Trust (CLAS) has recently acquired two limited-service hotels in Japan for a total of JPY 21 billion ($178.5 million). The two properties, ibis Styles Tokyo Ginza and Chisun Budget Kanazawa Ekimae, were purchased at an 8.3% discount to their independent valuation.
The acquisition is expected to have a positive impact on CLAS’ financials, with a projected distribution per stapled security (DPS) accretion of 1.6% by FY2024. Furthermore, the blended net operating income (NOI) yield of the two hotels is estimated to be 4.3% by FY2024. To hedge against currency fluctuations, the acquisition was funded using JPY-denominated debt and proceeds from the sale of four properties in Japan.
Located in Tokyo’s bustling shopping and entertainment district, ibis Styles Tokyo Ginza offers 224 units and is conveniently situated next to Ginza Six, a popular high-end retail mall. Guests can also easily access famous landmarks such as the Ginza Wako clock tower and the Uniqlo global flagship store. In Kanazawa, a city known for its cultural heritage, traditional gardens, and historic sites, Chisun Budget Kanazawa Ekimae boasts 392 units and offers easy access to attractions such as Kanazawa Castle and Kenrokuen Garden.
With these two latest acquisitions, CLAS has invested more than $530 million in the past 12 months. These additions to the portfolio are expected to generate higher yields than the four properties that were divested, ultimately enhancing CLAS’ income distribution. Among the recent investments is Teriha Ocean Stage, a rental housing property in Fukuoka, Japan, Standard at Columbia, a student accommodation property in the United States, and lyf Funan Singapore.
In 2024 alone, CLAS has completed divestments totaling over $500 million and achieved a net gain of $74 million. “The acquisition is part of our portfolio reconstitution strategy to enhance the quality of our portfolio and deliver stable returns to our Stapled Securityholders,” says 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,” she adds.
CLAS closed at 90 cents per unit after the news of the acquisition.