CapitaLand Ascott Trust acquires three rental housing properties in Japan for 4 billion yen
The properties are expected to strengthen the trust’s stable income stream
[SINGAPORE] CapitaLand Ascott Trust (Clas) has acquired three rental housing properties in Japan for a total of four billion yen, said managers of the real estate investment trust (Reit) on Wednesday (Aug 27).
The deal, worth S$34.2 million from exchange-rate figures provided by the managers, covers three properties: Splendide Namba West and Pregio Esaka South in Osaka, and Pre de Cort Nishikyogoku in Kyoto.
Serena Teo, the chief executive officer of the manager, said: “The acquisition demonstrates Clas’ ability to reconstitute our portfolio by redeploying divestment proceeds into higher-yielding assets, further enhancing Clas’ portfolio and the quality of our earnings.”
The acquisition has a distribution per stapled security (DPS) accretion of 0.3 per cent.
Teo said: “Built about five years ago, the three rental housing properties are located in prime areas of key gateway cities with expanding economic opportunities. With average lease terms of about two years and an average occupancy of about 97 per cent, the acquisition strengthens our stable income stream and portfolio resilience.”
The freehold properties are also expected to contribute to Clas’ distributable income “immediately”, with an expected net operating income (NOI) entry yield of 4 per cent in the 2025 financial year, which ends in December.
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This is “significantly higher” than the NOI exit yield of 0.4 per cent from the divestment of Citadines Karasuma-Gojo Kyoto serviced apartments, noted the managers.
NOI reflects the annual profitability of a property investment in relation to its initial purchase price.
The acquisitions were funded by Japanese yen-denominated debt and the sale of Citadines Karasuma-Gojo Kyoto, which netted around 6.2 billion yen in October last year.
The combined distributable income from the properties is expected to more than fully replace the income from the divested hotel, added the managers.
“Japan is one of our key markets. Post-acquisition, Clas’ properties in Japan account for 17.7 per cent of our total portfolio value, enabling us to better capitalise on the strong lodging demand in the country, while maintaining a geographically diverse portfolio,” said Teo.
Stapled securities of Clas ended Wednesday 0.6 per cent or S$0.005 lower at S$0.875.
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