CapitaLand Ascott Trust (CLAS) has divested Citadines Karasuma-Gojo Kyoto in Japan to an unrelated third party for about JPY6.18 billion (S$53.1 million[1]).
The 124-unit property was divested at 40.1% above book value at an exit EBITDA yield of about 0.3%[2]. Net proceeds of the divestment are JPY4.4 billion (S$37.8 million) and CLAS has recognised a net gain[3] of JPY0.9 billion (S$8.0 million).
Ms. Serena Teo, Chief Executive Officer of CapitaLand Ascott Trust Management Limited and CapitaLand Ascott Business Trust Management Pte. Ltd. (the Managers of CLAS), said: “The divestment of Citadines Karasuma-Gojo Kyoto is in line with CLAS’ active portfolio reconstitution strategy. The mature property has reached the optimal stage of its lifecycle.
We plan to redeploy the divestment proceeds into higher-yielding investments to further grow our returns to Stapled Securityholders. Japan remains a key market for CLAS and is one of our strongest performing markets. We continue to seek opportunities to strengthen our portfolio in Japan.”
“The proposed acquisition of lyf Funan Singapore announced last week demonstrates CLAS’ ability to enhance value for Stapled Securityholders by using proceeds from our divestment of Citadines Mount Sophia Singapore at an exit EBITDA yield of 3.2%[4] towards the proposed acquisition of lyf Funan Singapore at a higher yield of 4.7%[5].
In 1H 2024, CLAS also completed the acquisition of Teriha Ocean Stage, a rental housing property in Fukuoka, Japan and fully acquired Standard at Columbia, a student accommodation property in the United States of America.
The acquisitions will strengthen our income stream, creating sustainable value for our Stapled Securityholders,” added Ms Teo.
To further enhance the quality of CLAS’ portfolio, it has completed asset enhancement initiatives (AEI) for four properties[6] in 1H 2024. CLAS has four[7] additional properties in its AEI pipeline that are expected to complete between 2H 2024 and 2026. These AEIs will better position CLAS’ properties to capture lodging demand, raise their value and drive higher returns.
CLAS’ portfolio in Japan
CLAS’ properties in Japan saw high demand in 2Q 2024. Revenue per available unit increased 29% year-on-year to JPY19,288 as its average daily rate continued to rise. Post-divestment, CLAS will have a portfolio of 29 properties comprising a mix of serviced residences, hotels, rental housing and student accommodation properties in Japan. These properties are situated in gateway cities such as Tokyo, Osaka, Fukuoka, Hiroshima and Sapporo.
Proposed acquisition of lyf Funan Singapore to grow CLAS’ income stream
On 1 October 2024, CLAS announced the proposed acquisition of lyf Funan Singapore at an agreed property value of S$263 million[8]. It is expected to increase CLAS’ total distribution by S$3.5 million, which translates to a Distribution per Stapled Security accretion of 1.5% on a FY 2023 pro forma basis. Subject to the approval of Stapled Securityholders at an extraordinary general meeting scheduled in November 2024, the proposed acquisition is expected to be completed in 4Q 2024[9].
Notes:
- Based on the exchange rate of S$1 to JPY0.0086.
- Based on FY 2023 EBITDA.
- Assuming proceeds are redeployed in Japan.
- Exit EBITDA yield is computed based on the divestment price of S$148.0 million.
- The EBITDA yield is computed based on the agreed property value of lyf Funan Singapore.
- The Robertson House by The Crest Collection in Singapore, Citadines Les Halles Paris, Citadines Kurfürstendamm Berlin and La Clef Tour Eiffel Paris.
- Citadines Holborn-Covent Garden London, Temple Bar Hotel Dublin, The Cavendish London and Sydney Central Hotel.
- Takes into account the independent valuations of the property by HVS and Colliers as at 30 June 2024.
- While the target date for completion is 4Q 2024, the long stop date for completion is 28 February 2025 or such later date as the parties to the Unit Purchase Agreement may agree.
