Ascott Residence Trust (ART) has entered into agreements to acquire three freehold rental housing properties in central Sapporo for a total of 6.78 billion yen.
The three properties – City Court Kita 1 jo, 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 the end of June.
The acquisition of the three rental housing properties will be funded by debt and part of the net proceeds from recent divestments.
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 capitalization 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 COVID-19, further enhancing income stability.
“ART’s acquisition of our first student accommodation asset Paloma West Midtown in Georgia, U.S., 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.”© Travel News Asia