Singapore listed Ascott Residence Trust or Ascott REIT, has reached a deal to sell six properties in Japan for JPY4.48 billion (S$52.6 million).
These properties are currently held by its subsidiary ARC-CapitaLand Three Tokutei Mokuteki Kaisha (TK3). At the same time, TK3 will continue to own five other properties in Japan.
Explaining the rational for the sale, Ascott REIT said: “The properties are currently operated as rental housing. The sale is in line with Ascott REIT’s active asset management strategy to unlock the underlying value of the properties, which offers limited growth and re-deploy proceeds in other higher yielding assets to enhance Ascott REIT’s portfolio. Moreover, the properties are more than 10 years old and are located in regional cities of Japan where there is limited potential upside. Given the current strong investor demand for rental housing properties, it is an opportune time for Ascott REIT to divest these properties at an attractive price.”
The transaction price is 12.5 per cent above the valuation of the properties as at 30 June 2015. The deal will result in a net gain of approximately JPY288.9 million (equivalent to approximately S$3.4 million).
“Net sale proceeds may be used for asset enhancement, capital expenditure, funding potential acquisitions, other general corporate purposes and/or distribution of any part of the net gain to Unitholders,” the REIT said in a regulatory filing.
In June 2015, Ascott Reit, which is an indirect unit of Capital Land Limited, had successfully raised S$250 million ($186.2 million) from the issuance of perpetual securities, which received strong investor participation with a four-time oversubscription. The proceeds from the securities, whose distribution rate was fixed at 4.68 per cent per annum, will be use to fund potential acquisitions in the future, the trust management firm had said at that time.
In the same month, the REIT also acquired three quality serviced residences and four rental housing properties in Australia and Japan for S$298.3 million at an EBITDA yield of 5.1 per cent. Recently, it forayed into the United States of America by acquiring a hotel in New York Times Square for $163.5 million.
In October 2014, it had acquired a hotel in Tokyo, Japan at a price of JPY8 billion (approximately S$95.2 million), its second buy in Japan last year.