CapitaLand Ascott Trust Sells Three Hotels in Osaka, Japan

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(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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