CapitaLand Ascott Trust Buying Singapore Co-Living Asset From Ascott-QIA Fund for $204M

CapitaLand Ascott Trust has agreed to buy a downtown Singapore hotel from a private fund managed by its sponsor for S$263 million ($204.4 million), as the SGX-listed REIT pursues a strategy to recycle capital into higher-yielding assets.

CLAS is acquiring the 329-room Lyf Funan Singapore at a 4.7 percent yield based on earnings before interest, tax, depreciation and amortisation, the trust’s managers said Tuesday in a release. The deal comes after the REIT sold the 154-unit Citadines Mount Sophia in the Bugis area earlier this year at an exit EBITDA yield of 3.2 percent, the managers said.

The seller, Ascott Serviced Residence Global Fund, is a 50:50 joint venture of sponsor The Ascott Ltd and the Qatar Investment Authority. The deal value includes a S$146.4 million purchase consideration, S$113 million in assumed debt and S$5.7 million in fees, said the managers — which, like Ascott, are owned by Temasek-controlled CapitaLand Investment.

“The DPS-accretive acquisition of Lyf Funan Singapore will increase our presence in Singapore, our home ground,” said Serena Teo, CEO of the managers. “Being a key gateway city, growth in demand in the Singapore hospitality market is expected to outpace supply as global flight connectivity and capacity increase.”

Third Pickup of 2024

Opened in 2019 and catering to the youth market through Ascott’s co-living brand, Lyf Funan Singapore has a licence to offer both short and extended stays. The Hill Street property’s rooms range from studios aimed at solo travellers or couples to larger apartments for up to nine guests. The hotel is part of CapitaLand’s Funan integrated development, which also comprises retail and offices.

The proposed acquisition of Lyf Funan Singapore is CLAS’s third buy to be announced in 2024 as the REIT continues to rework its portfolio.

In January, the trust completed the acquisition of Teriha Ocean Stage, a rental housing property in Japan’s Fukuoka, at an expected net operating income yield of 4 percent. Five months later, CLAS acquired the remaining 10 percent stake in Standard at Columbia, a South Carolina student housing asset, with the EBITDA yield on total investment cost estimated at 7 percent.

CLAS has divested six properties this year for a total of S$340 million to date, including the March sale of Citadines Mount Sophia to a joint venture of Weave Living and Blackrock for S$148 million. The acquisition of Lyf Funan Singapore will be funded largely by the proceeds from the Citadines divestment, the managers said.

Upon completion of the deal in the fourth quarter, CLAS will enter into a master lease with Ascott. The buy will give the REIT five properties in Singapore and increase the proportion of the trust’s total assets in the country from 16 percent to 19 percent.

Series Moves Forward

The $600 million Ascott Serviced Residence Global Fund was set up with Qatar’s sovereign wealth fund in 2015 to invest in serviced residences and rental housing assets in Asia Pacific and Europe.

As ASRGF neared its tenth year, the fund’s successor, the $600 million CapitaLand Ascott Residence Asia Fund II, was announced in February and picked up a $75 million commitment from Amsterdam-based Bouwinvest Real Estate Investors.

CapitaLand Investment began deploying CLARA II with acquisitions of a half-stake in a Singapore hotel and a Tokyo apartment block from Ascott. Both properties are being repositioned and rebranded under the Lyf brand, with Lyf Bugis Singapore having opened its doors in August.