Southeast Asia’s largest developer, CapitaLand, has doubled its investment in the US with a single, $835 million purchase of a portfolio of multifamily properties, according to an announcement by the Singaporean company this week.
The government-linked developer’s CapitaLand International subsidiary is buying the set of 16 properties in the western US from Barry Sternlicht’s Starwood Capital, according to sources familiar with the transaction who spoke with Mingtiandi, bringing the Singaporean property firm’s US holdings to over $1.5 billion.
The transaction, which was announced on September 18th, comes just over one week after CapitaLand’s compatriots at Ascendas-Singbridge bought a set of 33 US office properties estimated to be worth $1 billion from Starwood Capital. The pair of deals bring the US private equity firm’s sales to Singaporean investors to a value of over $1.8 billion in the month of September.
CapitaLand Builds US Holdings
“This latest acquisition in the US, the world’s biggest economy, would expand CapitaLand’s global investment portfolio, diversify our business outside of our two core markets of Singapore and China and allow us to grow new businesses,” Lee Chee Koon, president and group CEO of CapitaLand said in a statement.
The portfolio comprises 3,787 apartment units, classified as Class B properties, located in suburban communities of the metropolitan areas of Seattle, Portland, Greater Los Angeles and Denver. CapitaLand indicated that the homes are operating at over an average of over 90 percent occupancy, with average length of stay of about two years, and the average price per unit works out to $220,000.
The assets appear to come from a $5.3 billion set of US multifamily assets that Starwood acquired from Sam Zell’s Equity Residential in 2015. In that transaction, the Connecticut-based private equity firm bought a portfolio of 23,262 apartments across markets in South Florida, Denver, Colorado, Washington DC, Seattle, Washington and Inland Empire, California.
Are US Residential REITs in CapitaLand’s Future?
CapitaLand’s Lee said that, “As a leading global real estate player, it is important for CapitaLand to create value for our stakeholders with an optimal portfolio mix which is efficient and high returning, through a balanced and meaningful allocation between developed and emerging markets.” He also indicated that the Singaporean firm, which operates a portfolio of five Singapore-listed REITs, would have the option to spin off the properties into new investment vehicles and partnerships.
In October last year another Singaporean property investor, Keppel Group received approval from the Singapore stock exchange to list $820 million in US office assets composed of properties acquired from America’s KBS Pacific Advisors. And in 2016, Canadian insurer Manulife created the first Singaporean REIT of US property assets when it listed the Manulife US REIT on the Singapore exchange.
Ascott Team Leads CapitaLand into the US
“We are acquiring a well-diversified portfolio of multifamily assets across several suburban markets in a single transaction, each regional market with a critical mass of over 1,000 units, CapitaLand International’s newly-minted CEO Gerald Yong said in a statement. Yong took up his new role at the helm of the developer’s international investment division this month after serving more than five years as Chief Investment Officer with CapitaLand’s serviced apartment division, The Ascott Limited.
Ascott, which operates CapitaLand’s serviced apartment division and its affiliated Ascott Residence Trust (Ascott REIT), has been the group’s pioneer in the US market.
During June of last year, Ascott Residence Trust purchased a 224 room hotel near New York’s Times Square for $106 million, and then in October Ascott Limited bought a Silicon Valley hotel for S$81.5 million (then $60.1 million). And in July of 2017, Ascott acquired an 80 per cent stake in US rental housing operator Synergy Global Housing for S$46.7 million (then $33.7 million).
In total, through Ascott and Ascott REIT, CapitaLand Group now owns five US properties with over 1,260 units in Manhattan, New York and Silicon Valley, after first entering the US market in 2015.