Divestment is part of the stapled group&rsquo s strategy to recycle capital and reconstitute its portfolio to enhance returns

 

CAPITALAND Ascott Trust (Clas) has agreed to divest its property in Tianjin, China, managers of the stapled group said on Tuesday (Oct 22).

 

The Somerset Olympic Tower Tianjin will be sold to an unrelated third party for an undisclosed price, although the managers noted that it is &ldquo above book value&rdquo , and that more details of the transaction will be provided upon its completion.

 

The divestment is part of the stapled group&rsquo s strategy to recycle capital and reconstitute its portfolio to enhance returns to its stapled securityholders, the managers said.

 

Serena Teo, chief executive officer of Clas&rsquo managers, expects the divestment will have minimal impact on the stapled group&rsquo s gross profit.

 

She noted that Clas&rsquo properties in China contributed 1.4 per cent to the stapled group&rsquo s total gross profit in the first half of 2024.

 

&ldquo We continually reconstitute Clas&rsquo portfolio by divesting mature properties such as Somerset Olympic Tower Tianjin and redeploying the proceeds towards more optimal uses,&rdquo Teo added.

 

The 30-storey mixed-development property opened in 1998 and is located in the Heping District of Tianjin. It comprises 185 serviced residence units and a three-storey retail podium.

 

Post-divestment, the stapled group will have four properties in China.

 

The managers expect the transaction to be completed in the second quarter of 2025.

 

Prior to Somerset Olympic Tower Tianjin, Clas had divested nearly S$400 million in assets in the year to date, unlocking about S$54 million in gains, they noted.

 

CAPITALAND Ascott Trust : HMN +0.52% (Clas) has divested Citadines Karasuma-Gojo Kyoto in Japan for about 6.2 billion yen (S$53.1 million).

 

On Wednesday (Oct 9), its managers said the sale price is 40.1 per cent above the 124-unit serviced residence&rsquo s book value as at end-2023.

 

It also represents an exit yield of about 0.3 per cent, based on Clas&rsquo FY2023 earnings before interest, taxes, depreciation and amortisation (Ebitda).

 

The transaction has resulted in net proceeds of 4.4 billion yen, as well as a net gain of 900 million yen.

 

Serena Teo, the managers&rsquo chief executive officer, said the divestment is in line with the trust&rsquo s active portfolio reconstitution strategy.

 

&ldquo 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,&rdquo she added.

 

Last week, Clas proposed to acquire lyf Funan Singapore at an agreed property value of S$263 million. This is expected to increase Clas&rsquo total distribution by S$3.5 million, representing a distribution per stapled security accretion of 1.5 per cent on a FY2023 pro forma basis.

 

Teo noted that the proceeds from this divestment at an exit Ebitda yield of 3.2 per cent will go towards the proposed acquisition of lyf Funan Singapore at a higher yield of 4.7 per cent, thereby enhancing value for stapled securityholders.

 

She added that Japan remains a key market for Clas and is one of its &ldquo strongest performing markets&rdquo .

 

Clas&rsquo properties in Japan experienced high demand in the second quarter of this year, said the stapled group. Revenue per available unit of Clas&rsquo Japan properties rose 29 per cent on the year to 19,288 yen, while average daily rate continued to increase.

 

Post-divestment, Clas will have a portfolio of 29 properties in Japan, including serviced residences, hotels, rental housing and student accommodation properties.

 

Citadines Karasuma-Gojo Kyoto is a 10-storey freehold property located in the Shimogyo ward in the Kyoto prefecture.

 

While Clas&rsquo managers only referred to the buyer of Citadines Karasuma-Gojo Kyoto as an &ldquo unrelated third party&rdquo , The Financial Times reported that vacation ownership and experiences, company Hilton Grand Vacations, announced that it had acquired the property.

 

The newly bought asset is the company&rsquo s first property in Kyoto and its third property in Japan. The acquisition is also part of Hilton Grand Vacations&rsquo continued efforts to expand its presence in Japan.

It represents an exit yield of about 0.3 per cent, based on Clas&rsquo FY2023 Ebitda

 

Metro acquires freehold Sydney prime office property for A$196.4 million

It was purchased with joint venture partner Sim Lian Group of Companies

 

MAINBOARD-LISTED Metro Holdings : M01 0% on Wednesday (Oct 9) announced the acquisition of a freehold prime office property in Sydney, Australia, for A$196.4 million (S$172.3 million). 

 

The 27-storey office building is located in the financial core of Sydney&rsquo s central business district, and was bought by Metro with its joint venture partner, Sim Lian Group of Companies. 

 

Refurbished in 2021, the building spans a net lettable area (NLA) of 12,418 square metres (sq m), with an occupancy of 85 per cent as at September 2024, which is &ldquo well-supported by a diverse tenant mix&rdquo , said Metro in a bourse filing. 

 

The property has a weighted average lease expiry by income of about three years. 

 

The A$196.4 million price tag comprises mainly the purchase consideration of the property, related stamp duty, as well as other costs and expenses. Metro&rsquo s capital commitment for the investment is around A$30.8 million and will be funded primarily by internal cash sources and external borrowings, said the group. 

 

The investment is not expected to have any significant effect on its consolidated net tangible assets per share, nor on its consolidated earnings per share for the current financial year ending Mar 31, 2025, it added.  

 

With the acquisition, Metro and Sim Lian now hold 18 freehold properties in Australia, including five office buildings and 13 retail centres. 

 

The total appraised value of this portfolio of properties will be around A$1.4 billion, with a total NLA of 176,227 sq m spanning New South Wales, Victoria, Queensland and Western Australia, Metro said. 

 

The group&rsquo s chief executive officer and executive director Yip Hoong Mun said the latest acquisition will continue to benefit from flight-to-location and flight-to-quality trends witnessed in the office market. 

 

The opportunistic acquisition strategically expands the group&rsquo s footprint in Australia and deepens its partnership with Sim Lian, he added. 

The purchase consideration is estimated at S$146.4 million

 

CAPITALAND Ascott Trust : HMN -0.51% (Clas) has proposed to acquire Victory SR Trust (VSRT), which directly holds a 100 per cent interest in lyf Funan Singapore.

 

On Tuesday (Oct 1), its managers said the purchase consideration is estimated at S$146.4 million after accounting for VSRT&rsquo s net asset value (NAV) based on the property&rsquo s agreed value of S$263 million, and agreed adjustments to the NAV.

 

Including the repayment of an existing facility taken out by VSRT&rsquo s trustee amounting to S$113 million, along with the purchase consideration and other acquisition-related fees, Clas&rsquo managers foresee an acquisition outlay of around S$265.1 million.

 

The S$146.6 million purchase consideration is expected to be largely funded from Clas&rsquo sale of Citadines Mount Sophia Singapore, which was completed in March 2024.

 

The property&rsquo s agreed value of S$263 million is at a 1.9 per cent discount to the average of two independent valuations.

 

Its managers project the acquisition to increase Clas&rsquo total distribution by S$3.5 million while keeping its gearing under &ldquo a healthy&rdquo 40 per cent.

 

Based on FY2023 pro forma estimates, the higher total distribution translates to a distribution per stapled security (DPS) accretion of 1.5 per cent, as well as an earnings before interest, taxes, depreciation and amortisation (Ebitda) yield of 4.7 per cent.

 

Clas said the acquisition of this property is therefore in line with the stapled group&rsquo s portfolio reconstitution strategy.

 

Serena Teo, chief executive of the managers, noted that the entry Ebitda yield for lyf Funan Singapore is 150 basis points higher than the investment exit Ebitda yield of about 3.2 per cent for Citadines Mount Sophia Singapore.

 

Ascott to open 28 properties in South-east Asia in 2024

 

&ldquo The DPS-accretive acquisition of lyf Funan Singapore will increase our presence in Singapore&hellip Additionally, income contribution from Singapore will balance the contribution from Clas&rsquo overseas markets,&rdquo she said.

 

Clas&rsquo sponsor The Ascott Limited holds a 50 per cent stake in Ascott Serviced Residence Global Fund, which indirectly wholly owns the vendor of VSRT.

 

Located at 67 Hill Street at the fourth level of Funan, lyf Funan Singapore is a 329-room hotel development under Ascott&rsquo s lyf hospitality concept.

 

Acquiring this asset will bring Clas&rsquo total properties in Singapore to five, and increase the proportion of its total assets in the country to 19 per cent versus 16 per cent as at end-June 2024.

 

Optimism in Singapore&rsquo s hotel industry

The acquisition indicated Clas&rsquo optimism of the performance of Singapore&rsquo s hotel industry, said Teo in a media briefing on Tuesday morning.

 

She noted that Singapore hotel&rsquo s revenue per available room, or RevPAR, has exceeded 2019 levels by 16 per cent. With travel still recovering to pre-Covid levels, she expects future demand for Singapore hotels to remain healthy.

 

Lyf Funan Singapore, which has a hotel licence, is also &ldquo performing well&rdquo , said Teo. She pointed out that it is currently more than 80 per cent occupied, and has an average daily rate of more than S$200. The average daily rate refers to the daily average rental revenue earned for an occupied room.

 

These figures are in line with comparable properties in the market, she said. Moreover, lyf Funan Singapore, which is centrally located, caters to both short and long-stay travellers across different ages, she added.

 

In response to a question at the briefing, Teo disagreed that Clas was buying the asset when the hotel market has peaked.

 

&ldquo I think Singapore will always have a resilient demand (for hotels). There could be some ups and downs across months&hellip but when we look at travel statistics from the Singapore Tourism Board, actually the demand in Singapore remains healthy,&rdquo she said.

 

Post-acquisition, Clas also intends to ink a master lease with Ascott for lyf Funan Singapore. The agreement will come with an initial term of 20 years, with the master lessee paying rent equivalent to 93.5 per cent of the property&rsquo s gross operating profit.

 

Completion of the deal is slated for the fourth quarter of 2024.

 

Both the acquisition and entry into the master lease are subject to approval from Clas&rsquo stapled securityholders at an extraordinary general meeting scheduled to take place in November.

 

Apart from the acquisition of lyf Funan Singapore, Teo said that the manager is eyeing further acquisitions in developed markets such as Japan and Europe where Clas has a presence in. It is also in the midst of divestment negotiations for some of its existing properties.

 

Stapled securities of Clas ended Monday S$0.005 or 0.5 per cent higher at S$0.975. 

It says the expansion comes amid robust growth prospects in the region

 

ASCOTT, the wholly owned lodging business unit of CapitaLand Investment : 9CI +0.68% (CLI), expects to open 28 properties across South-east Asia in 2024.

 

The group&rsquo s expansion comes amid robust growth prospects in the region, where the hotels market is expected to grow at a compound annual growth rate of 5.8 per cent to achieve US$16.4 billion in revenue by 2029, said Ascott on Monday (Sep 23).

 

It also expects tourist arrivals to achieve pre-pandemic levels by the end of this year.

 

Wong Kar Ling, chief strategy officer and managing director of South-east Asia for Ascott, said: &ldquo Contributing over 30 per cent of our total revenue, this region remains central to Ascott&rsquo s global expansion strategy.&rdquo

 

She also noted that the group is &ldquo on track&rdquo to open the 28 properties in the region this year, with 12 already completed.

 

Additionally, Ascott also announced 28 new signings year-to-date in the region. The new signings will add more than 3,400 units across its various brands, including lyf, Citadines and Oakwood.

 

Following the new signings, Ascott&rsquo s portfolio in the region will amount to more than 360 assets, both operational and in the pipeline. They will also account for more than half of the group&rsquo s year-to-date global signings.

 

Seven of the newly signed properties are part of the Oakwood brand, which will open in Cambodia and expand across several Indonesian cities and Singapore.

 

Somerset properties accounted for four of the new assets, while Citadines made up three.

 

Ascott partners SG Enable to foster disability inclusion in Singapore&rsquo s hospitality sector

 

Meanwhile, The Unlimited Collection has expanded with two new properties in Malaysia, and the lyf brand also added two new assets in Singapore.

 

By geography, Ascott has also increased its Malaysian portfolio by more than 20 per cent, with the signing of nine new properties in Penang in 2024 to date. This is almost twice the number of signings last year, said the group.

 

In Batam, Indonesia, Ascott also doubled its portfolio to 14 properties over the last two years.

 

Following the new signings, the company noted that it will also enter into new cities such as Purwakarta in Indonesia and Kulim in Malaysia.

On Aug 30, CapitaLand Ascott Trust Management non-executive non-independent director Kevin Goh Soon Keat acquired a principal amount of S$250,000 in CapitaLand Ascott Trust : HMN +1.64% Perpetual Securities.

 

On Aug 7, DBS Trustee, acting as trustee of CapitaLand Ascott Reit, issued S$150 million in principal amount of 4.6 per cent subordinated perpetual securities, which were listed and quoted on the Singapore Exchange on Aug 8.

 

Goh is also the CEO of lodging in CapitaLand Investment : 9CI 0% and on the board of CapitaLand India Trust Management, the trustee-manager of CapitaLand India Trust : CY6U +2.7%.

 

DBS Bank has sold 1.492 million units in CapitaLand Ascott Trust HMN -0.55% (CLAS) to the open market.

 

The sale, which was conducted on Aug 26, netted the bank $1.35 million or 90.5 cents per unit.

 

Following the sale, DBS now has a 0.77% stake in the trust.

 

On Aug 2, DBS disposed of another 378,700 units in CLAS for $337,043 or 89 cents per unit. The sale reduced DBS&rsquo s stake in CLAS to 0.896% at the time.

 

CLAS reported a distribution per stapled security (DPS) of 2.55 cents for the 1HFY2024 ended June 30, 8% lower y-o-y.

 

Revenue for the same period rose by 11% y-o-y to $386.4 million due to sustained demand for lodging and a stronger operating performance.

 

Revenue per available unit (RevPAU) grew by 5% y-o-y to $145 thanks to higher room rates, especially in Japan and the US.