Ascott REIT to Acquire Accretive Assets in China and Japan for S$287 Million
Ascott REIT to acquire accretive assets in China and Japan for S$287 million
Singapore, 2 May 2013 – Ascott Residence Trust (Ascott Reit) has entered into conditional agreements to acquire three prime serviced residences in China and a stable portfolio of 11 rental housing properties in Japan (the Acquisitions) for S$287.4 million at an EBITDA yield of 5.4%. On a pro forma basis, the accretive Acquisitions are expected to increase FY 2012 distribution per unit by 2.9% from 8.76 cents to 9.01 cents.
Ascott Reit will acquire Citadines Biyun Shanghai and Somerset Heping Shenyang for RMB321 million (approximately S$63.2 million) and RMB438 million (approximately S$86.2 million) respectively from Ascott Serviced Residence (China) Fund, in which The Ascott Limited (Ascott) holds a 36.1% stake. Ascott Reit will acquire Citadines Xinghai Suzhou from Ascott for RMB118 million (approximately S$23.2 million). The three serviced residences in China will continue to be managed by Ascott.
In addition, Ascott Reit will acquire 11 rental housing properties in Japan for JPY9.2 billion (approximately S$114.8 million) from ACRJ3 Pte. Ltd., an 88.9% owned subsidiary of Ascott. The rental housing properties have a total of 959 apartment units across six cities in Japan, namely Fukuoka, Sapporo, Kyoto, Hiroshima, Saga and Sendai.
Mr Lim Jit Poh, Ascott Residence Trust Management Limited‟s (ARTML) Chairman, said: “Asia remains a hotspot for Ascott Reit to grow. We are acquiring quality assets in China and Japan, two of the world‟s largest economies. This will increase our Asia portfolio from 59% to 63% of our total asset value. The Acquisitions demonstrate our ability to invest the S$150 million raised recently from our equity placement which was completed on 6 February 2013.”
Mr Lim added: “The Acquisitions will broaden Ascott Reit‟s earning base and increase the scale of our portfolio. Besides adding 1,576 apartment units to our current 7,060 apartment units, Ascott Reit‟s asset size will increase by 11% from S$2.8 billion to S$3.1 billion. The number of cities where Ascott Reit has its presence will also be increased from 25 to 32 cities. These will raise our profile amongst global investors.”
Mr Ronald Tay, ARTML‟s Chief Executive Officer, said: “China is a key growth market for Ascott Reit. The Acquisitions will deepen our presence in Shanghai as its economy continues to grow and demand for serviced residences remains strong. We will also expand to the growing cities of Shenyang and Suzhou.”
“In Japan, the two properties in Fukuoka and Sapporo constitute about 50% of the portfolio value and EBITDA contribution of the 11 rental housing properties. Fukuoka is the capital city of the Fukuoka Prefecture and the economic and transportation hub for the Kyushu region. Sapporo, the fourth most populated city in Japan, is the capital and largest city of the Hokkaido Prefecture. It also serves as the political, economic and manufacturing centre of the prefecture. We continue to expand our presence in Kyoto with two more properties which are under master leases. The remaining seven properties in Hiroshima, Saga and Sendai constitute 40% of the portfolio value and EBITDA contribution, about half of which comes from master leases, namely the two properties in Saga and the one property in Sendai.”
Mr Tay added: “The 11 rental housing properties, which cater mainly to Japanese on long stay of one to two years, have enjoyed a steady occupancy of above 95% over the past few years. Moreover, five of them are master leased to third parties. Our Acquisitions in Japan will further enhance Ascott Reit‟s income stability.”
The Acquisitions will be funded partly by the S$150 million raised from Ascott Reit‟s equity placement and the balance will be funded by debts.
The Acquisitions of Citadines Biyun Shanghai, Somerset Heping Shenyang, Citadines Xinghai Suzhou and the 11 rental housing properties are inter-conditional. Ascott Reit will seek Unitholders‟ approval for the transactions at an extraordinary general meeting to be held on 30 May 2013.
Please refer to Annex for more information on the properties for acquisition.
 Based on exchange rate of RMB1.00 = S$0.19676.
 Based on exchange rate of JPY1.00 = S$0.01248.
Citadines Biyun Shanghai Citadines Biyun Shanghai is located within the Jinqiao Export Processing Zone in Pudong District, which houses more than 50 Fortune 500 companies. It is also a 10-minute drive from Zhangjiang High-Tech Park and is situated just minutes from the Jinqiao Biyun International District, Carrefour supermarket, Tomson Golf Club as well as dining and retail outlets. Citadines Biyun Shanghai offers 180 units ranging from studios to three-bedroom duplex apartments.
Somerset Heping Shenyang Somerset Heping Shenyang has a strategic location in Shenyang's main commercial and shopping district with an array of dining, retail and entertainment options. The serviced residence is within a 10-minute walk from Shenyang Railway station and Shenyang Metro station. It is also near the Parkson Department Store, City Plaza Building and President Building. Somerset Heping Shenyang offers 270 spacious one- to three-bedroom apartments.
Citadines Xinghai Suzhou Citadines Xinghai Suzhou is located in the heart of Suzhou Industrial Park, close to the Central Business District in the west of Jinji Lake. The serviced residence is within walking distance from a multitude of restaurants, entertainment and shopping outlets. Citadines Xinghai Suzhou offers 167 units comprising studios, one-bedroom and two-bedroom apartments.
The following table shows key information relating to the serviced residences in China for acquisition:
11 rental housing properties in Japan
The rental housing properties have good locations near subway stations, shopping malls, government offices, universities and hospitals. The properties offer a range of one- to fourbedroom apartments.
The following table shows key information relating to the rental housing properties for acquisition: