Category: Asia Pacific - Japan - Industry economy
- Group or hotel buyout - Figures / Studies
This is a press release selected by our editorial committee and published online for free on 2025-02-03
CapitaLand Ascott Trust (CLAS) has acquired two freehold limited-service hotels in Japan for a total of JPY21 billion (S$178.5 million[1]).
The two hotels are ibis Styles Tokyo Ginza located in the country’s capital and Chisun Budget Kanazawa Ekimae situated in Kanazawa, one of the top tourist destinations amongst domestic travellers in Japan. The acquisition is priced at an 8.3% discount to independent valuation[2].
On a FY 2024 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[3] in Japan.
Ms Serena Teo, Chief Executive Officer of CapitaLand Ascott Trust Management Limited and CapitaLand Ascott Business Trust Management Pte. Ltd. (the Managers of CLAS), said: “The acquisition is part of our portfolio reconstitution strategy to enhance the quality of our portfolio and deliver stable returns to our Stapled Securityholders. 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. CLAS continues to focus on delivering growth by ensuring our portfolio is well-positioned to capture lodging demand.”
“Japan is a key market for us. Post-acquisition, 18% 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% and 12% respectively[2]. 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,” added Ms Teo.
In FY 2024, CLAS’ properties in Japan achieved the strongest performance among its key markets. Revenue per available unit for CLAS’ serviced residences and hotels in Japan grew 37% year-on-year to JPY23,987 in 4Q 2024. Post-acquisition, CLAS’ Japan portfolio comprises two serviced residences, four hotels, 23 rental housing properties and a student accommodation property.
Two well-located properties to capture travel demand
ibis Styles Tokyo Ginza is located within the capital city’s premium 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. A plethora of retail and dining options are located around the property’s immediate vicinity. Guests can access Tokyo’s subway network easily via the Higashi Ginza or Ginza station, both about a six- to eight-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. Kanazawa is also known for its premium seafood given its coastal location. The property is a 10-minute drive to the city’s central business district as well as to event and sports venues. It is within a five-minute walk to the Kanazawa train station, connecting guests to other major cities in Japan via the Shinkansen, the country’s high-speed rail system. The city also has flight connections with Seoul, Shanghai and Taiwan.
Recycling capital into quality assets at higher yields
Including ibis Styles Tokyo Ginza and Chisun Budget Kanazawa Ekimae, CLAS has completed investments of about S$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. In 2024, CLAS completed over S$500 million in divestments and unlocked about S$74 million[4] in net gains.
Notes:
- Based on an exchange rate of JPY1 to S$0.0085 unless stated otherwise.
- Commissioned independent market valuation by Cushman & Wakefield.
- The four divested properties in Japan are Infini Garden, a rental housing property in Fukuoka and three hotels in Osaka – Hotel WBF Honmachi, Hotel WBF Kitasemba East and Hotel WBF Kitasemba West.
- Includes the transfer of S$19.3 million from the asset revaluation reserve to revenue reserve for the divestments in Australia.
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