CapitaLand Ascott Trust (CLAS) has announced the acquisition of two freehold limited-service hotels in Japan for JPY21 billion (S$178.5 million). The properties, ibis Styles Tokyo Ginza and Chisun Budget Kanazawa Ekimae, are strategically located in Tokyo and Kanazawa, respectively. The acquisition, priced at an 8.3% discount to independent valuation, is expected to yield a 4.3% net operating income in FY 2024, significantly higher than the 2% yield from four previously divested properties in Japan.
The acquisition was funded through JPY-denominated debt and proceeds from the divestment of four properties in Japan. This strategic move is part of CLAS’s portfolio reconstitution strategy aimed at enhancing portfolio quality and delivering stable returns to its Stapled Securityholders. Serena Teo, CEO of CapitaLand Ascott Trust Management Limited, stated, “By swiftly redeploying divestment proceeds into these higher-yielding assets, we have fully replaced the income from the four divested properties.”
Japan remains a key market for CLAS, with 18% of its total assets now located in the country. The properties are positioned to benefit from the strong international travel demand, with visitor numbers in Tokyo and Kanazawa surpassing pre-COVID levels by 23% and 12%, respectively. The hotels will operate under management contracts, allowing CLAS to capture income upside.
In the past year, CLAS has completed investments totalling approximately S$530 million, including the recent acquisitions. This aligns with their strategy to recycle capital into quality assets at higher yields, enhancing income distribution for stakeholders.
