Ascott Buys Five More Properties in Japan

(09 Mar 2022, 11:16 +07)  Ascott Residence Trust (ART) has unveiled plans to invest about JPY 10.4 billion (S$125 million) to acquire four rental housing properties and its first student accommodation property in Japan.

Three of the rental housing properties are located in central Osaka with the other in Fukuoka, one of the fastest growing cities in the country.

The student accommodation property in Osaka serves the main campus of Kindai University (KU), which is just a two-minute walk away. KU has over 30,000 undergraduate students.

The yield-accretive acquisitions are set to increase ART’s pro forma FY 2021 Distribution per Stapled Security by approximately 1.7%. The average NOI yield is expected to be about 4%.

Eslead College Gate Kindaimae

The five properties will be acquired on a turnkey basis from two different sellers on a willing buyer and willing seller basis.

The transactions are expected to be completed between 1Q 2022 and 2Q 2023.

Ms Beh Siew Kim, Chief Executive Officer of Ascott Residence Trust Management Limited and Ascott Business Trust Management (the managers of ART) said, “ART continues to build up our longer-stay portfolio to boost income stability. Post-acquisition, on a pro forma basis, ART’s longer-stay properties are expected to contribute 17% to gross profit, up from 15% in FY 2021. As the five properties will be acquired on a turnkey basis, there is no development risk. Minimal down payment is required and the majority of the payment will be made upon completion of the transactions. We remain committed to delivering sustainable, long-term value to our Stapled Security holders.”

With these latest acquisitions, ART has invested about S$905 million in longer-stay properties since January 2021.

The acquisitions of the five freehold rental housing and student accommodation properties will increase ART’s longer-stay properties to 17% of its total portfolio value.

ART is on track to meet its medium-term target of 25-30% for its longer-stay properties, strengthening the resilience of ART’s portfolio. 

“The addition of four more rental housing properties will boost the overall resilience of our portfolio. Leases for the four properties are about two years in length, providing better visibility and stability in future cashflows. ART’s existing rental housing properties in Japan have achieved a strong average occupancy rate of over 95% in 2021 despite COVID19. The three rental housing properties in Sapporo have performed well since our acquisition in June 2021. We expect the four new rental housing properties to perform strongly too. Our first student accommodation property in Japan adds to our quality portfolio of eight student accommodation properties in the USA. It is located close to a highly reputable university with a large student population, and there is limited competing supply. The property in Japan is under a 15-year master lease with the largest student accommodation operator in the country, generating stable income for ART,” added Ms Beh.

See also: Ascott Residence Trust Buys More Student Accommodation in USA, Ascott to Develop Student Accommodation in South Carolina, USA and Ascott Residence Trust to Buy UIUC Student Accommodation Building in Illinois, USA.