Ascott Reit acquires New York hotel for US$158m

ASCOTT Reit has bought over a hotel in downtown New York City for US$158 million, it said in an announcement on Monday.

At least S$100 million of the acquisition will be funded by proceeds to be raised from a private placement that the Reit launched on Monday, with the rest to be funded by debt.

The 369-unit Sheraton Tribeca New York Hotel is located in Tribeca and adjacent to SoHo, and is Ascott Reit's second acquisition in the "Big Apple" in less than a year.

Ascott Reit expects the acquisition to report an Ebitda of 6.8 per cent, and to increase its distribution income in FY15 by US$6.6 million, or a rise in distribution per unit from 7.99 Singapore cents to about 8.11 Singapore cents.

Through the private placement, Ascott Reit will issue 94,787,000 new units to institutional and other investors at an estimated price of between S$1.055 per unit and S$1.085 per unit. Morgan Stanley is the placement agent and underwriter for the private placement, but is not advising Ascott Reit or the manager on the acquisition.

In the fourth quarter of 2015, Ascott Reit bought its first property in New York. The boutique hotel, called Element New York Times Square West, was its biggest contributor to revenue growth, according to Ascott Reit.

"Besides the United States of America, we will actively seek accretive acquisitions in key cities of markets such as Australia, Japan and Europe," said chairman Lim Jit Poh.