(01 Jun 2021)
Ascott Residence Trust (ART) has entered into
agreements to acquire three freehold rental housing properties in central Sapporo for a total of JPY 6.78 billion (S$85.2 million).
The three properties – City Court Kita 1 jo
(pictured), Big Palace Minami 5 jo,
and Alpha Square Kita 15 jo – are within walking distance from
train stations, a wide range of retail and entertainment options,
and are either within or near the central business district.
The average EBITDA yield of the three acquisitions is
approximately 4% and the transactions are expected to complete by end
The acquisition of the three rental housing properties
will be funded by debt and part of the net proceeds from recent
Bob Tan, Chairman of Ascott Residence Trust Management Limited and
Ascott Business Trust Management Pte. Ltd. (the Managers of ART),
said, “Through ART’s active portfolio reconstitution, we are able
to create value for Stapled Securityholders by reinvesting
proceeds from our recent divestments at a lower capitalisation
rate of about 2% into higher yielding and resilient rental housing
properties in Japan at about 4% yield.
“ART’s acquisitions of these
rental housing properties will increase our presence in the
longer-stay accommodation segment and diversify from hospitality assets which are facing headwinds due to COVID19, further
enhancing income stability.
“ART’s acquisition of our first student
accommodation asset Paloma West Midtown in Georgia, USA in
February 2021 was also another step to increase our stable income.
With the acquisitions, our student accommodation and rental
housing portfolios will expand to about 8% of our total property
value. We aim to grow it to about 15% – 20% in the medium term. We
will continue to actively reconstitute ART’s portfolio and seek
yield-accretive investment opportunities to deliver long-term
value for our Stapled Securityholders.”
In other news, on 27 May 2021, ART successfully
completed the divestment of Somerset Xu Hui Shanghai to an
unrelated third party for RMB 1.05 billion (S$216.6 million).
divestment price was 171% above the property’s book value and the
exit yield was approximately 2%. Through the transaction, ART has
received net proceeds of about RMB 953.9 million (approximately
S$196.8 million) and realised a net divestment gain of about RMB
582.6 million (approximately S$120.2 million).
Ms Beh Siew
Kim, Chief Executive Officer of Ascott Residence Trust Management
Limited and Ascott Business Trust Management Pte. Ltd. (the
Managers of ART), said, “ART is further maximising returns to our
Stapled Securityholders with the acquisitions of the three rental
housing properties. On a FY 2020 pro forma basis, ART’s
Distribution per Stapled Security is expected to increase by 2.6%.
In 2020 amid COVID19, ART’s 11 rental housing properties in Japan
performed well at an average occupancy rate of 96%, especially
those located close to key demand drivers such as the working
population in the central business districts or students from
universities. Rental housing leases, which are typically two years
in length, also provide greater visibility and stability in future cashflows.”
Sapporo is the capital of Hokkaido and a key
economic and logistics hub. Rates of rental housing properties in
the city have
remained stable and ART expects strong demand for the three
properties given the limited new supply.
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