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Ascendas Hospitality Trust to acquire Ibis Ambassador Seoul for 77.5b won
ASCENDAS Hospitality Trust is set to acquire a hotel property in South Korea for 77.5 billion won (S$94.5 million).
The manager of the trust said after Wednesday's trading close that it has entered into an agreement with The Korean Teachers’ Credit Union and KT&G Corp to take over Ibis Ambassador Seoul Insadong, following its maiden entry into the South Korean city through the acquisition of The Splaisir Seoul Dongdaemun.
The trust will acquire 98.8 per cent of the owner of Ibis Ambassador Seoul Insadong, Richmond Private Jongno Business Hotel Real Estate Trust No 1 (Trust No 1). The trust's sponsor and controlling stapled security holder, Ascendas (Korea) Pte Ltd, will acquire the remaining 1.2 per cent of Trust No 1.
The agreed consideration for Ibis Ambassador Seoul Insadong is priced at a 3.1 per cent discount to its latest valuation, and translates to a pro forma net property income yield of 4.6 per cent.
This latest acquisition is expected to be fully funded by debt, and is expected to be completed by the end of December 2018, the trust manager added.
Tan Juay Hiang, CEO of the manager of the trust and Ascendas Hospitality Fund Management said: “We are pleased to acquire Ibis Ambassador Seoul Insadong, which is strategically located near to a major business district and leisure destinations."
He noted that hotel market in Seoul has benefited from the strong recovery in inbound arrivals as a result of, among other things, marketing campaigns and the draw of Korean culture. Inbound visitors to South Korea till to September climbed 12.1 per cent year-on-year, while visitors from its top source market, China, grew 9.4 per cent year-on-year during the same period.
Ibis Ambassador Seoul Insadong is currently leased to and operated by Ambasstel, Inc under a master lease agreement. This agreement will carry on after the hotel is acquired by Ascendas Hospitality Trust. Ambasstel is part of Ambassador Hotel Group, a hotel group which opened its first hotel in the 1950s. Ambassador Hotel Group, which has a collaboration with AccorHotels via a joint investment in a hotel management company, currently operates more than 20 hotels across South Korea.
Ascendas Hospitality Trust closed at 77.5 Singapore cents on Wednesday, up 0.5 Singapore cent.