CapitaLand Ascott Trust (CLAS) announced its acquisition of three freehold rental housing properties in Japan for a total of JPY4 billion.
Two of the rental housing properties, Splendide Namba West and Pregio Esaka South, are in Osaka, while the third, Pre de Cort Nishikyogoku, is in Kyoto.
On a FY 2024 pro forma basis, the acquisition of the three rental housing properties has a Distribution per Stapled Security (DPS) accretion of 0.3 percent.
In line with CLAS’ portfolio reconstitution strategy, the acquisition was funded by proceeds from CLAS’ divestment of Citadines Karasuma-Gojo Kyoto in October 2024 and JPY-denominated debt.
The expected net operating income (NOI) entry yield of the acquisition is four percent in FY 2025. This is significantly higher than the NOI exit yield of 0.4 percent from the divestment of Citadines Karasuma-Gojo Kyoto.
The three operating assets will contribute to CLAS’ distributable income immediately.
On an annualised basis, the combined distributable income is expected to more than fully replace the income from the divested Citadines Karasuma-Gojo Kyoto.
CapitaLand Ascott Trust Management Limited and CapitaLand Ascott Business Trust Management Pte Ltd chief executive Serena Teo said: “The acquisition demonstrates CLAS’ ability to reconstitute our portfolio by redeploying divestment proceeds into higher-yielding assets, further enhancing CLAS’ portfolio and the quality of our earnings. Built about five years ago, the three rental housing properties are located in prime areas of key gateway cities with expanding economic opportunities. With average lease terms of about two years and an average occupancy of about 97 percent, the acquisition strengthens our stable income stream and portfolio resilience. Meanwhile, our earlier acquisition of two hotels in Tokyo and Kanazawa in January 2025 positions us to benefit from the growing travel demand. This combination of stable and growth income sources is a key strength for CLAS.”
Surging forward in a key market
Japan is one of CLAS’ key markets and, post-acquisition, its properties in the country will account for 17.7 percent of the company’s entire portfolio.
This will essentially enable CLAS to better capitalise on the strong lodging demand in the country, whilst maintaining a geographically diverse portfolio.
Teo said: “We remain focused on our three-pronged strategy: unlocking value through divestments, investing in yield-accretive opportunities, and uplifting portfolio quality through well-timed asset enhancement initiatives (AEIs), to deliver steady long-term returns to our Stapled Securityholders.”
In total, CLAS will have 33 assets in Japan, comprising two serviced residences, four hotels, 26 rental housing properties, as well as a student accommodation property.
Its properties in the living sector such as rental housing and student accommodation account for about 17 percent of CLAS’ total portfolio value.
In the medium term, CLAS aims to increase its allocation towards living sector assets to about 25 to 30 percent, with the remaining 70 to 75 percent to serviced residences and hotels.
