Ascott Residence Trust (Ascott Reit) has acquired a 369-unit hotel in Manhattan barely a year after buying its first New York property.
It has paid US$158 million (S$217 million) for The Sheraton Tribeca New York Hotel, which opened in October 2010 and had an occupancy rate of more than 90 per cent in the past year.
The acquisition announced yesterday is expected to increase Ascott Reit's distribution income for this financial year by US$6.6 million, translating to a rise in distribution per unit from 7.99 cents to approximately 8.11 cents.
The acquisition will be funded in part by a private share placement of$100 million that was launched yesterday.
Ascott Reit will issue 94,787,000 new units to institutional and other investors with an issue price range of between $1.055 and $1.085 per unit.
This represents a 6.1 per cent increase to the total number of units now in issue, and a discount of between 4.2 per cent and 6.8 per cent to the volume-weighted average price of $1.1324 per unit, the Reit said.
About $98.5 million in net proceeds will be used to fund the hotel acquisition, with the balance to be funded by debt.
The hotel will continue to be managed by FC-Canal Management under a franchise of the Sheraton brand. FC-Canal Management is one of the largest hotel operators in New York City.
Mr Lim Jit Poh, chairman of Ascott Residence Trust Management, said yesterday: "Our latest acquisition in New York will expand Ascott Reit's portfolio to 90 properties with 11,667 apartment units, bringing us a step closer to achieving our target asset size of $6 billion by 2017.
"Besides the United States, we will actively seek accretive acquisitions in key cities of markets such as Australia, Japan and Europe."
The Tribeca hotel enlarges the Reit's US portfolio to 10 per cent of its total asset size, with the Asia-Pacific constituting 63 per cent and Europe, 27 per cent.
Mr Ronald Tay, chief executive of Ascott Residence Trust Management, said: "In the fourth quarter of 2015, our maiden acquisition in New York, Element New York Times Square West, was the biggest contributor to revenue growth.
"We target to increase our presence in the United States to constitute up to 20 per cent of our asset size by 2017." Demand for quality accommodation in New York is at an "all-time high", Mr Tay said, with visitor arrivals to the state reaching a record 58.3 million last year.
Business travellers account for about 25 per cent of visitors each year, and Sheraton Tribeca New York Hotel will cater to the increasing demand for accommodation from corporate guests, he said.