CapitaLand Ascott Trust Adds Three Japan Rental Housing Properties for $27M

CapitaLand Ascott Trust has acquired two rental housing properties in Osaka and a third in Kyoto for a total of JPY 4 billion ($27 million), as Asia Pacific’s biggest lodging REIT continues to fine-tune its portfolio with a focus on Japan.

The 56-unit Splendide Namba West and 48-unit Pregio Esaka South in Osaka were built in 2021 and the 85-unit Pre de Cort Nishikyogoku in Kyoto was completed in 2020, the Singapore-listed trust’s managers said Wednesday in a release. The sellers weren’t disclosed.

CLAS funded the acquisition with the proceeds from last October’s JPY 6.2 billion sale of Citadines Karasuma-Gojo Kyoto and yen-denominated debt. The latest deal shows the REIT’s ability to reconstitute the portfolio by redeploying divestment proceeds into higher-yielding assets, said Serena Teo, CEO of the managers.

“Built about five years ago, the three rental housing properties are located in prime areas of key gateway cities with expanding economic opportunities,” Teo said. “With average lease terms of about two years and an average occupancy of about 97 percent, the acquisition strengthens our stable income stream and portfolio resilience.”

Portfolio Perks Up

Splendide Namba West in Osaka’s central Naniwa ward offers 1,582 square metres (17,029 square feet) of net lettable area across 15 floors, while Pregio Esaka South in the northern Osaka suburb of Suita provides 1,453 square metres over nine floors and Pre de Cort Nishikyogoku in Kyoto’s Ukyo ward features 2,399 square metres in a seven-storey block.

The expected entry yield of the acquired properties is 4 percent on a net operating income basis, up sharply from the NOI exit yield of 0.4 percent from Citadines Karasuma-Gojo Kyoto, according to the managers. On an annualised basis, the combined distributable income is expected to more than fully replace the income from the divested serviced apartment block.

The buys give CLAS a total of 33 assets in Japan, comprising two serviced residences, four hotels, 26 rental housing properties and a student accommodation facility. The trust acquired two hotels in Tokyo and Kanazawa in January for JPY 21 billion and aims to close the JPY 25 billion sale of the 206-key Citadines Central Shinjuku Tokyo in the fourth quarter of this year.

“Japan is one of our key markets,” Teo said. “Post-acquisition, CLAS’s properties in Japan accounts for 17.7 percent of our total portfolio value, enabling us to better capitalise on the strong lodging demand in the country, while maintaining a geographically diverse portfolio.”

Profitable Performance

CapitaLand Ascott Trust posted a 6 percent year-on-year jump in first-half gross profit to S$182.5 million ($141.8 million) on the strength of the REIT’s operating performance, portfolio reconstitution and asset enhancement initiatives.

CLAS reported a market capitalisation of S$3.4 billion and total assets of S$8.8 billion at the end of the first half. The 101-property trust holds much of its portfolio in serviced apartments under CapitaLand’s Ascott, Somerset, Quest, Citadines and Lyf brands.

The REIT reworked the portfolio in 2024 with the acquisitions of Teriha Ocean Stage, a rental housing property in Japan’s Fukuoka; Standard at Columbia, a South Carolina student housing asset; and Lyf Funan Singapore, a hotel in the city-state’s downtown; as well as disposals including Citadines Mount Sophia in the Bugis area and three Osaka hotels.