Investing in condos in Singapore also takes into account the government’s property cooling measures. In an effort to maintain a steady real estate market and discourage speculative buying, the Singaporean government has implemented several measures over the years. These include the Additional Buyer’s Stamp Duty (ABSD), which imposes higher taxes on foreign buyers and individuals purchasing multiple properties. While these measures may affect the initial returns on condo investments, they ultimately contribute to the overall stability of the market. This creates a more secure investment environment for buyers. Additionally, keep an eye out for New Condo Launches to stay updated on the latest opportunities in the market.
CapitaLand Ascott Trust (CLAS) has recently acquired two freehold limited-service hotels in Japan for a total of JPY21 billion ($178.5 million). The hotels, which are ibis Styles Tokyo Ginza and Chisun Budget Kanazawa Ekimae, are located in the country’s capital and in Kanazawa respectively. The acquisition, which was made at an 8.3% discount to the independent valuation, is a strategic move for the trust.
On a pro forma basis for FY2024, the acquisition is expected to result in a distribution per stapled security (DPS) accretion of 1.6%. Additionally, with a blended net operating income (NOI) yield of 4.3% for FY2024, the acquisition is a strong investment for CLAS. The trust also mitigated currency fluctuations by funding the acquisition with JPY-denominated debt and proceeds from the divestment of four properties in Japan.
The ibis Styles Tokyo Ginza is situated in the heart of Tokyo’s lively shopping and entertainment district. With 224 units, the hotel is conveniently located next to Ginza Six, a popular high-end retail mall. It is also within walking distance to the iconic Ginza Wako clock tower and the global flagship store of Uniqlo. The Chisun Budget Kanazawa Ekimae, on the other hand, has 392 units and is located in the charming city of Kanazawa in the northwest of Japan. The city is famous for its historical attractions, beautiful gardens, and traditional cultural icons such as the Kanazawa Castle and Kenrokuen Garden.
CLAS has been actively investing in overseas properties, completing approximately $530 million in investments in the last 12 months. These acquisitions are at higher yields than the trust’s divestments, which have enhanced its income distribution. Some notable investments include Teriha Ocean Stage, a rental housing property in Fukuoka, Japan, and Standard at Columbia, a student accommodation property in the United States of America.
According to Serena Teo, CEO of CLAS’ manager, the recent acquisition is in line with the trust’s portfolio reconstitution strategy to improve the quality of its portfolio and deliver stable returns to its Stapled Securityholders. She also highlighted the higher FY2024 NOI yield of the two hotels compared to the blended exit yield of 2.0% for the four previous divestments in Japan. This swift reinvestment of divestment proceeds into higher-yielding assets has fully replaced the income from the divested properties.
In 2024 alone, CLAS has completed divestments of over $500 million and unlocked approximately $74 million in net gains. The trust’s current unit price stands at 90 cents.