Ascott Reit Steps Up Growth Through Acquisitions Of Seven Quality Assets In Australia And Japan For S$298.3 Million
Ascott Residence Trust (Ascott Reit) is stepping up its growth by acquiring three quality serviced residences and four rental housing properties in Australia and Japan for S$298.3 million at an EBITDA yield of 5.1%. These accretive acquisitions are expected to increase Ascott Reit’s distribution income for FY 2014 by S$3.9 million and distribution per unit by 2.9% from 8.20 cents to 8.44 cents on a pro forma basis.
Ascott Reit will acquire the 380-unit Citadines on Bourke Melbourne from The Ascott Limited (Ascott) for AUD158.5 million (S$167.6 million1 ). Ascott Reit will also acquire the remaining 40.0% interest in the 160-unit Citadines Shinjuku Tokyo2 and 124-unit Citadines KarasumaGojo Kyoto3 for JPY3,040 million (S$33.7 million4 ) and JPY1,440 million (S$16.0 million4 ) respectively from Ascott. The three serviced residences will continue to be managed by Ascott. In addition, Ascott Reit will acquire four rental housing properties in Osaka for JPY7,300 million (S$81.0 million4 ). Ascott currently holds an 18.9% stake in the four rental housing properties.
Mr Lim Jit Poh, Ascott Residence Trust Management Limited’s (ARTML) Chairman, said: “These yield accretive acquisitions will expand Ascott Reit’s portfolio in the stable and established markets of Australia and Japan where there is significant potential for us to grow. Australia is one of the top 10 global destinations for foreign direct investment and ease of doing business. International visitor arrival numbers of both Australia and Japan reached record high last year. Japan’s government is aiming for 20 million visitors by the 2020 Tokyo Olympic Games and has also created special zones to attract foreign companies to set up offices. Hence, we expect strong demand for these properties which will further enhance Ascott Reit’s portfolio.”
Mr Lim added: “The seven prime assets with 1,1525 apartment units will broaden Ascott Reit’s earning base and increase our scale to 11,368 apartment units in 95 properties across 39 cities, further diversifying our portfolio across key cities globally. Ascott Reit’s asset size will also enlarge from S$4.1 billion to S$4.4 billion, bringing us closer to our target asset size of S$6.0 billion by 2017. Ascott Reit will continue to deliver stable and growing distributions to Unitholders through accretive acquisitions, active asset management, and prudent capital and risk management.”
Mr Ronald Tay, ARTML’s Chief Executive Officer, said: “Japan assets have been delivering stellar operational performance for the past two years. Stronger operations of our serviced residences in Japan grew revenue per available unit (RevPAU) by 12.1% 6 for FY 2013, 14.0% 6 for FY 2014 and 16.8% 6 for 1Q 2015. RevPAU for Australia increased 16.3% 6 for FY 2014 due to higher demand for the newly renovated apartments at our serviced residence in Perth. The acquisitions will not only deepen Ascott Reit’s presence in Tokyo and Kyoto, but also expand our portfolio to the dynamic cities of Melbourne and Osaka.”
“As the capital city of Victoria and the second largest state in Australia, Melbourne accounts for approximately 22% of Australia’s economic activities and has an average economic growth of 2.9% over the past decade. Known for its ease of doing business, convenient access to the Asia-Pacific region and the city’s packed events calendar, we expect high accommodation demand from business and leisure visitors. With 380 apartments, Citadines on Bourke Melbourne is one of our biggest properties to date. The three Citadines-branded serviced residences with strategic locations in Melbourne, Tokyo and Kyoto have all enjoyed steady and strong occupancies.”
Mr Tay added: “Osaka is the third largest city in Japan by population and many top global companies are based there. The rental housing properties have been achieving high annual occupancy averaging around 97% for the past three years. Coupled with the long tenant leases, these properties will provide good income stability for our Unitholders. We will continue to look at acquiring rental housing properties that are located in key cities in Japan as the economy continues to improve with the government cutting its effective corporate tax rate to attract investors.”
In Australia, Ascott Reit currently owns one serviced residence in Perth (Citadines St Georges Terrace Perth) and three serviced residences under the Quest brand in Greater Sydney. In Japan, Ascott Reit currently owns three serviced residences (Somerset Azabu East Tokyo and 60.0% interest each in Citadines Shinjuku Tokyo and Citadines Karasuma-Gojo Kyoto) as well as 31 rental housing properties with 1,921 apartment units across seven major cities.
Ascott Reit will seek Unitholders’ approval for the transactions at an extraordinary general meeting to be held on 24 July 2015.