Ascendas Hospitality Trust has entered into an agreement to acquire three hotels in Osaka, Japan.

The manager of the hospitality trust said the acquisition of the hotels - WBF Kitasemba West, WBF Kitasemba East and WBF Honmachi - will deepen its presence in Osaka, Japan's third-largest city with a population of 2.7 million.

The total acquisition cost is about 11.24 billion yen (S$138 million), comprising the 10.29 billion yen purchase consideration, 102.9 million yen of acquisition fees payable to the Reit manager, and estimated professional fees and other transaction expenses of about 847.1 million yen.

The aggregate purchase consideration represents a 2.9 per cent discount to the latest valuation of the hotels of 10.6 billion yen.

Ascendas Hospitality Trust said the deal to buy the hotels from Es-con Japan will be fully funded by debt.

Its manager projects the transaction to be accretive to stapled security holders. On a pro forma basis, the distribution per stapled security for the 2017/18 financial year is expected to have increased by 4.3 per cent to 6.11 cents.

The acquisitions of WBF Kitasemba West and WBF Kitasemba East are expected to be completed by September, while the WBF Honmachi sale will close by January next year.

The hotels will be managed by an entity of White Bear Family Co, which is part of a hospitality group established in 1977. The group's businesses include travel agencies, hotel management and car rental.

White Bear Family operates close to 30 hotels across five cities in Japan, with 11 in Osaka.

Mr Tan Juay Hiang, chief executive of the managers, said: "Osaka is a key financial centre as well as a popular leisure destination, and inbound travel to the city has been on a strong growth trend.

"Osaka is a city we are familiar with and Ascendas Hospitality Trust's acquisition of Sunroute Osaka Namba in 2014 has been highly successful, with the latest valuation more than double the purchase price.

"Given the strong fundamentals of its hospitality market, this is a city in which we are keen to deepen our presence."

Ascendas Hospitality Trust units closed down 0.5 cent at 77 cents yesterday.