CapitaLand Ascott Trust (CLAS) is divesting its three hotels in Japan to an unrelated third party for 10.7 billion yen ($99.8 million). The hotels, which are all located in Osaka, are Hotel WBF Honmachi, Hotel WBF Kitasemba East and Hotel WBF Kitasemba West.
The total amount is about 15% above the hotels’ book value based on the independent valuation as at Dec 31, 2022.
The divestment is expected to net CLAS proceeds of 3.9 billion; CLAS will recognise a net gain of 1.1 billion yen.
“The divestment of the three properties is part of our active portfolio reconstitution strategy. The properties are situated outside the prime districts in 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,” says Serena Teo, CEO of the managers.
She adds that Japan is still an attractive market for the trust with its strong tourism sector and population growth in its gateway cities.
“The overall positive demand-supply dynamics bode well for our portfolio of hospitality and longer-stay assets in Japan,” she continues.
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In addition, CLAS is set to complete a turnkey acquisition of a 258-unit rental housing property in Fukuoka, Japan in 1Q2024. CLAS has also completed the acquisition of three prime lodging assets in London, Dublin and Jakarta at an ebitda yield of 6.2%.
“The assets have begun contributing to CLAS’s income, enhancing our returns. We remain focused on delivering long-term sustainable returns to our stapled securityholders,” says Teo.
After the divestment, CLAS will have a portfolio of about 30 properties comprising serviced residences, hotels, rental housing and student accommodation properties in Japan’s gateway cities of Tokyo, Fukuoka, Hiroshima, Osaka and Sapporo.
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The divestment of the three properties is expected to be completed on 1Q2024.
Units in CLAS closed 2.5 cents lower or 2.51% down at 97 cents on Dec 15.
