Weave-BlackRock JV Buying Singapore Citadines From CapitaLand Ascott Trust for $111M

Weave Living continues to expand its network of investors and its portfolio of properties, with the rental residential investor and operator announcing on Friday that it has formed a joint venture with a BlackRock fund to purchase a Singapore serviced apartment block for S$148 million ($111 million).

The Weave-BlackRock tie-up is acquiring Citadines Mount Sophia, a 154-unit property near the city-state’s Bugis area, from CapitaLand Ascott Trust, according to a statement by the SGX-list trust, for the equivalent of just over S$961,000 per key as the operator’s second Singapore location.

“We are excited to kick off the year with this partnership with BlackRock and securing our second and flagship location in Singapore,” Weave founder and group chief executive Sachin Doshi said in a statement. “Following a successful launch of our first property in Singapore last year with Weave Suites – Midtown, we have witnessed overwhelming demand for our design-led, professionally-managed accommodation solutions and are looking forward to expanding the Weave collection in the Lion City.”

Opening its inaugural Singapore location in Kampong Glam in March of last year, Weave rapidly leased out the 65-unit set of former shophouses at rents exceeding original estimates. The Hong Kong-based firm entered its third market in September with the purchase of a set of nine residential properties in Tokyo, with Weave having since added to more locations in the Japanese capital.

Neighbourhood on the Way Up

Located at 8 Wilkie Road, Citadines Mount Sophia is the residential component of the Wilkie Edge mixed-use development, with a Keppel Capital fund backed by Dutch pension fund manager PGGM having last month acquired the commercial elements of the complex from local investors Lian Beng and Apricot Capital for S$348 million in an unrelated transaction.

The 2008-vintage property is located less than a ten-minute walk from both the Rochor and Bencoolen stations on the MRT’s Downtown line, is within 1 kilometre (0.6 miles) from Singapore Management University and just a few blocks from LaSalle College of the Arts.

In a statement to the Singapore stock exchange on Friday morning Capitaland Ascott Trust said that it was selling the property for 19.4 percent above its book value, as of 31 December.

“The divestment is part of our active portfolio reconstitution strategy. CLAS completed the acquisition of four assets in the last three months at a higher entry yield and we look to expand our portfolio opportunistically with more yield-accretive assets,” Serena Teo, chief executive officer of the trust’s manager said in the statement.

Doshi’s team plans to undertake a year-long renovation of the property before reopening the building in early 2025 under its Weave Suites serviced accommodation brand with both studio and one-bedroom units.

The property is located less than 300 metres from the former Hotel G, which Gaw Capital one month ago sold to a 50:50 joint venture between Ascott Ltd and CapitaLand Wellness Fund, a vehicle which the Temasek Holdings-backed giant had established late last year with Thai developer Pruksa Holding.

With Ascott Trust’s website showing Citadines Mount Sophia having a valuation of S$124 million as of 31 December 2022, “the JV partners anticipate a significant uplift in yield and eventual capital value of the property through Weave Living’s active operations and asset enhancement capabilities,” according to the Weave statement.

Betting on Beds

BlackRock’s investment in the Weave joint venture is its second major bet on Singapore’s living sector in recent months, with the world’s largest asset manager having late last year acquired Blackstone’s economic interest in a City Developments Ltd residential project on Sentosa island.

“The living sector in Singapore is an underserved market showing strong demand and potential for rental growth,” BlackRock director of APAC real estate Andrew Lee said in the statement. “This transaction fits perfectly with our investment strategy in terms of geographies and sectors we are focusing across the region.”

In addition to its Sentosa venture and its partnership with Weave, BlackRock said in December that a fund under its management is teaming up with a Japanese property crowd-funding platform to expand its investments in Japan’s residential market.

Under the joint venture with the BlackRock managed fund, Weave, which serves as developer, fund manager and operator for its platform, says it plans to continue its regional expansion, with this latest acquisition marking its 22nd location in the region.

Big Partners, Deep Pockets

The BlackRock joint venture follows earlier tie-ups by Weave, which has backing from Warburg Pincus, with top fund managers globally. The company’s recent partnerships with global capital partners include an August 2022 acquisition of an apartment tower on Robinson Road in Hong Kong in a joint venture with LaSalle Investment Management for $35 million.

That deal in Central came just three months after Weave worked with Angelo Gordon to purchase a hotel in Hong Kong Island’s Western district for $115 million. In April of 2022 Weave had linked up with PGIM Real Estate to acquire the Rosedale Hotel in Kowloon for $175 million.

With Weave having announced its Japan entry in September of last year, the company has now acquired 11 Tokyo properties over the last three months. Those assets are to be operated under its newly launched Weave Place brand, which incorporate a mix of furnished and unfurnished units in key urban hubs.

In addition to Weave’s already announced projects in Hong Kong, Singapore and Japan, the company’s website holds a heading for South Korean projects with the promise that listings are “coming soon”.