CapitaLand Ascott Trust Adds Two Japanese Hotels for $140M

After a series of Japanese asset divestments in 2024, CapitaLand Ascott Trust is replenishing its portfolio in its third-largest market by asset value, announcing the purchase of two hotel properties in the country for JPY 21 billion ($140 million).

The acquisition, which includes a 224-room property in Tokyo’s retail and entertainment hub Ginza district and a 392-room hotel in Kanazawa, a coastal heritage city about 473 kilometers (294.5 miles) west of Tokyo, brings CapitaLand Ascott Trust’s property count in Japan to 30, the majority of which are rental housing assets under management contracts. The sellers of the properties were not disclosed.

“Japan is a key market for us. Post-acquisition, 18 percent of CapitaLand Ascott Trust’s total assets are located in the country. With Japan continuing to enjoy strong international travel demand, the two well- located properties are poised to capture the demand from travellers visiting Tokyo and Kanazawa,” Serena Teo, CEO of the trust’s managers said. The trust’s two biggest markets remain Singapore and the United States.

Having accounted for 14 percent of the trust’s revenue in 2024, Japan also produced the highest top-line growth among its largest markets in the last three months of the year. CapitaLand Ascott Trust’s Japanese serviced residences and hotels saw a 37 percent rise in revenue per available unit in the fourth quarter, ahead of Singapore’s 15 percent growth and Australia’s 11 percent, according to a financial report issued by the REIT’s managers last week.

Hotel Shuffle

CapitaLand’s latest Japan acquisition comes a year after its last purchase in the country, a rental housing asset which it acquired in Fukuoka in January 2024. This week’s addition to its portfolio includes two hotels – Ibis Styles Tokyo Ginza and Chisun Budget Kanazawa Ekimae.

Both the newly acquired budget hotels are less than a 10-minute walk from the nearest train stations and close to business districts. ibis Styles Tokyo Ginza is within a few steps of the Ginza Six mall and Uniqlo’s global flagship store, while Chisun Budget Kanazawa Ekimae is near Kanazawa Castle, Kenrokuen Garden, and the city’s historic geisha and samurai districts.

The pair of acquisitions come after Ascott Trust in March sold three Osaka hotels to Hong Kong’s Axe Management Partners for JPY 10.7 billion. In October the REIT sold a 389-unit rental property to Goldman Sachs for JPY 12.7 billion and later that same month announced the sale of its 124-unit Citadines Karasuma-Gojo Kyoto to Hilton Grand Vacations for JPY 6.2 billion ($42 million).

Ascott Trust is acquiring its latest properties at an 8.3 percent discount to an independent valuation, according to the trust’s managers, and will be funded through Yen-denominated debt and proceeds from the completed property sales.

The trust – which holds much of its portfolio in serviced apartments under CapitaLand’s Ascott, Somerset, Quest, Citadines, and lyf brands – expects to deliver a 1.6 percent increase in distribution per stapled security (DPS) following the new acquisitions.

The additional assets are expected to generate a 4.3 percent return on income based on their 2024 performance, compared to the 2 percent aggregate return from the trust’s four recently divest Japanese properties.

“By swiftly redeploying divestment proceeds into these higher-yielding assets, we have fully replaced the income from the four divested properties. CLAS continues to focus on delivering growth by ensuring our portfolio is well-positioned to capture lodging demand,” said Teo, adding that revenue per room is expected to rise in both the Ginza and Kanazawa markets.

Tourist Tide

Japan’s booming tourism market has become a target for hospitality investors as the latest data from Japan National Tourism Organization (JNTO) show that the country received about 3.2 million international travellers in November, which was up 30.6 percent from the same month a year before.

For January to November, 33.4 million international travellers visited Japan, surpassing the full year count of 25.1 million international tourists in 2023.