CapitaLand Ascott Trust expands Japan portfolio with two hotel acquisitions worth S$178.5M

SINGAPORE: On Friday, Jan 31, CapitaLand Ascott Trust (CLAS) announced that it has recently acquired two freehold limited-service hotels in Japan for JPY21 billion (S$178.5 million).

The two hotels are ibis Styles Tokyo Ginza in Tokyo’s shopping and entertainment district and Chisun Budget Kanazawa Ekimae in Kanazawa, acquired at an 8.3% discount to an independent valuation.

On an FY2024 pro forma basis, the acquisition of the two hotels is expected to increase distribution per stapled security (DPS) by 1.6%, with a blended net operating income (NOI) yield of 4.3%. To manage currency fluctuations, the purchase was funded through JPY-denominated debt and proceeds from the company’s sale of four properties in Japan.

The first hotel, ibis Styles Tokyo Ginza, has 224 units and is close to the popular upscale shopping mall Ginza Six, the Uniqlo flagship store, and a short walk from iconic landmarks such as the Ginza Wako clock tower. The property is also surrounded by retail and dining options, with Higashi Ginza and Ginza stations just a six- to eight-minute walk away for easy subway access.

The second hotel, Chisun Budget Kanazawa Ekimae, is a 392-unit property located in Kanazawa, northwest Japan, a city known for its historical sites, gardens, and cultural landmarks like Kanazawa Castle, Kenrokuen Garden, heritage geisha, and samurai districts.

The property is a 10-minute drive from the city’s business district and event venues and a five-minute walk from Kanazawa train station, which connects to other major cities in Japan by high-speed train.

According to Serena Teo, CEO of CLAS’ manager, “The acquisition is part of our portfolio reconstitution strategy to enhance the quality of our portfolio and deliver stable returns to our Stapled Securityholders.”

She added, “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.”

With the addition of ibis Styles Tokyo Ginza and Chisun Budget Kanazawa Ekimae, CLAS has invested around S$530 million in the past 12 months. These acquisitions offer higher yields than recent property sales, boosting CLAS’ income distribution.

In 2024, CLAS acquired rental housing property Teriha Ocean Stage in Fukuoka, Japan, in January, the remaining 10 per cent stake in student accommodation property Standard at Columbia in the US in June, and lyf Funan Singapore in December.

CLAS completed over S$500 million in property sales in 2024, with around S$74 million in net gains. /TISG

Read also: CapitaLand Ascott Trust’s profit in H2 2024 reaches S$198M, up 8% YoY