CapitaLand Ascott Trust Sells Three Hotels in Osaka, Japan

Dark/Light Mode (18/12/23)  CapitaLand Ascott Trust (CLAS) is in the process of finalising the sale of three hotels in Osaka, Japan to an unrelated third party for a total of JPY10.7 billion, approximately SG$99.8 million.

The three properties - Hotel WBF Honmachi, Hotel WBF Kitasemba East and Hotel WBF Kitasemba West - are being sold at about 15% above book value.

Net proceeds of the divestment are expected to be about JPY3.9 billion (SG$36.4 million) and CLAS will recognise a net gain of JPY1.1 billion (SG$10.1 million).

The sale of the three properties is expected to be completed in Q1 2024.

Hotel WBF Kitasemba West in Osaka, Japan

“The divestment of the three properties is part of our active portfolio reconstitution strategy. The properties are situated outside the prime districts of Osaka and the divestment enables CLAS to unlock the value of the properties, redeploying capital to assets and/or asset enhancement initiatives that can generate stronger yields, uplifting the overall value of our portfolio,” said Serena Teo, CEO of CapitaLand Ascott Trust Management. “Japan remains an attractive market for CLAS. Its strong tourism sector receives robust demand from both international and domestic sources. Population growth in the gateway cities also continues to rise with more locals moving into the urban cities. The overall positive demand supply dynamics bode well for our portfolio of hospitality and longer-stay assets in Japan.”

Post-divestment, CLAS will have a portfolio of about 30 properties in Japan, comprising serviced residences, hotels, rental housing and student accommodation in gateway cities such as Tokyo, Fukuoka, Hiroshima, Osaka and Sapporo.

In 2022, CLAS entered into 11 acquisitions in Japan, comprising longer-stay assets such as rental housing and student accommodation properties.

CLAS’ serviced residences have performed strongly on the back of pent-up demand following Japan’s full reopening of its borders. Revenue per available unit (RevPAU) for serviced residences was 198% higher year-on-year in Q3 2023, exceeding pre-COVID levels of Q3 2019 by 17% on a same-store basis.

The average daily rate for the Tokyo properties has surpassed pre-COVID levels, at more than 20% higher compared to Q3 2019.

With the strong operating performance, two of CLAS’ hotels which are under master leases have also received variable rent in addition to fixed rent, boosting CLAS’ income stream.

“CLAS is set to complete a turnkey acquisition of a 258-unit rental housing property in Fukuoka, Japan in Q1 2024. Following the strong approval from our Stapled Securityholders, we have also completed the acquisition of three prime lodging assets in London, Dublin and Jakarta at an EBITDA yield of 6.2% [excluding milestone payments which are to be made only when 70% of the renovations of The Cavendish London and Temple Bar Hotel are completed. Including the milestone payments, the EBITDA yield is 5.1% on a FY 2022 proforma basis]. The assets have begun contributing to CLAS’ income, enhancing our returns. We remain focused on delivering long-term sustainable returns to our Stapled Securityholders,” added Ms. Teo.

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