Ascott Residence Trust to buy three Japan rental housing assets for $85.2m

SINGAPORE (THE BUSINESS TIMES) - Ascott Residence Trust (ART) will acquire three rental housing properties in Japan for 6.78 billion yen (S$85.2 million), it said on Tuesday (June 1).

The properties - City Court Kita 1 jo, Big Palace Minami 5 jo and Alpha Square Kita 15 jo - have a total of 411 units and are located in central Sapporo.

Their average Ebitda (earnings before interest, tax, depreciation and amortisation) yield is about 4 per cent, the stapled hospitality group added.

The acquisitions will be funded by debt and part of the net proceeds from recent property sales, including Somerset Xu Hui Shanghai, and are expected to complete by the end of this month.

Mr Bob Tan, chairman of ART's managers, said the acquisitions will help "diversify from hospitality assets which are facing headwinds due to Covid-19".

Last year, amid Covid-19, ART's 11 rental housing properties in Japan had an average occupancy rate of 96 per cent. "Rental housing leases, which are typically two years in length, also provide greater visibility and stability in future cash flows," said Ms Beh Siew Kim, chief executive of the managers.

Including the earlier acquisition of its first student accommodation asset, ART's student accommodation and rental housing portfolios will expand to about 8 per cent of its total property value. The managers aim to grow that figure to about 15 per cent to 20 per cent in the medium term, Mr Tan said.

After the acquisitions of the Japanese rental properties, ART's managers said it will still have access to about $1.2 billion comprising cash, credit facilities and net divestment proceeds.

The trust has a debt headroom of $1.9 billion and gearing of 36.8 per cent.

Stapled securities of ART closed unchanged at 99.5 cents on Monday.