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Ascendas Hospitality Trust acquires hotel in South Korea
ASCENDAS Hospitality Trust (A-HTRUST) has, through Ascendas Hospitality Business Trust, entered into a sale and purchase agreement to acquire a majority stake in KY-Heritage Hotel Dongdaemun for KRW72.1 billion (S$89 million).
It will hold a 98.7 per cent stake in the 215-room hotel, while the remainder will be held by Ascendas (Korea), which is a wholly-owned subsidiary of Ascendas Land International (ALI). ALI is a controlling stapled security-holder and sponsor of A-HTrust, which is a stapled group comprising the business trust as well as Ascendas Hospitality REIT.
The KRW72.1 billion sum is at a 3.2 per cent discount to the 4-star hotel's latest valuation and translates to a pro forma net property income yield of 4.1 per cent, A-HTRUST said in a release on Friday. The freehold, 20-storey hotel, which was completed in 2015, is located in the prominent Dongdaemun area and is close to some of the city's other attractions, such as Dongdaemun Design Plaza and Doota Mall. Its facilities include a restaurant, a cafe, two conference rooms and a gym.
A-HTRUST also highlighted that the acquisition is expected to be accretive. Assuming A-HTRUST had owned the hotel since April 1, 2016, on a pro forma basis, the distribution per stapled security for FY2016/17 would have edged up from 5.68 Singapore cents to 5.69 cents.
The acquisition is expected to be fully funded by debt.
Tan Juay Hiang, chief executive of the managers, said: "The acquisition is in line with our strategy to invest in markets with sound hospitality fundamental and growth potential. After completion, the hotel will be managed by an established regional hotel management company and we believe there is potential to enhance asset value through rebranding and repositioning."
The completion of the deal, which is contingent on certain conditions, including the necessary regulatory approvals, is expected to take place by June this year.