CapitaLand Ascott Trust (CLAS) has acquired two freehold limited-service hotels in Japan for a total of JPY21 billion ($178.5 million). The two hotels are ibis Styles Tokyo Ginza located in the country’s capital and Chisun Budget Kanazawa Ekimae situated in Kanazawa. The acquisition is priced at an 8.3% discount to independent valuation.
On a FY2024 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.
ibis Styles Tokyo Ginza is located within the capital city’s shopping and entertainment district.
The 224-unit hotel is next to Ginza Six, a popular high-end retail mall and the well-known Uniqlo global flagship store in Ginza is just a stone’s throw away. The Ginza Wako clock tower, an iconic landmark in the district, is less than a 10-minute walk away.
The 392-unit Chisun Budget Kanazawa Ekimae is situated in Kanazawa, in the northwest of Japan. Similar to Kyoto, the city is well known for its historical attractions, traditional landscaped gardens, and cultural icons which guests can access easily.
These include the Kanazawa Castle, Kenrokuen Garden, and heritage geisha and samurai districts featuring preserved architectural designs from Japan’s Edo period.
Including ibis Styles Tokyo Ginza and Chisun Budget Kanazawa Ekimae, CLAS has completed investments of about $530 million in the last 12 months. These acquisitions are at higher yields than CLAS’ divestments, enhancing CLAS’ income distribution.
Acquisitions completed in 2024 include Teriha Ocean Stage, a rental housing property in Fukuoka, Japan which CLAS acquired in January 2024.
In June 2024, CLAS acquired the remaining 10% stake in Standard at Columbia, a student accommodation property in the United States of America and in December 2024, CLAS completed the acquisition of lyf Funan Singapore.
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In 2024, CLAS completed over $500 million in divestments and unlocked about $74 million in net gains.
“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 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," she adds.
CapitaLand Ascott Trust closed at 90 cents per unit.
