Ascendas Hospitality Trust Takes Three Osaka Hotels for SIN $102m

Date: June 2018

Location: Osaka, Japan

Name: Hotel WBF Kitasemba West

 

No. of Keys: 518

Seller: Tokyo-listed real estate firm Es-con Japan Ltd.

Buyer: Singapore-listed Ascendas Hospitality Trust has struck a deal to buy three newly-built hotels in Osaka for a total price of about 11.24 billion yen (S$101.6 million), amid a surge of overseas tourist arrivals in Japan’s third-largest city.

The acquisition will boost the trust’s portfolio to 13 hotels across Asia Pacific with a total value of over S$1.7 billion.

Ascendas Hospitality Trust, which is managed by subsidiaries of Singaporean developer Ascendas-Singbridge Group, already owns a pair of hotels in Osaka and Tokyo.

Property giant Ascendas-Singbridge is jointly owned by Singapore government-linked firms Temasek Holdings and JTC Corporation.

The deal for the trio of Japanese properties, comes after Ascendas Hospitality Trust made its maiden Korean acquisition in April.

On the same day the deal was disclosed, Osaka was rocked by a strong earthquake that killed at least five people and injured hundreds.

Later that day, Ascendas Hospitality Trust announced that no physical damage was detected to its existing property or the new hotels that it is buying in the city.

“Osaka is a city we are familiar with and A-H Trust’s acquisition of Sunroute Osaka Namba in 2014 has been highly successful, with the latest valuation more than double the purchase price,” commented Tan Juay Hiang, CEO of the managers of the trust in a statement. “Given the strong fundamentals of its hospitality market, this is a city in which we are keen to deepen our presence.”

The hotels are: The 168-room Hotel WBF Kitasemba West is located close to the Kitahama subway station

The freehold properties, located in the Honmachi district nearby the downtown business and entertainment hub, are all three-star hotels under Japan’s Hotel WBF brand, and will be managed by a unit of domestic tourism and hospitality firm White Bear Family Co, Ltd.

Hotel WBF Kitasemba West, located at Chuo-ku, Awajicho 3-22, has 168 rooms and was completed in March 2018.

Completed in April were the 168-room Hotel WBF Kitasemba East, at Chuo-ku, Awajicho 2-36-1; and Hotel WBF Honmachi, at Chuo-ku, Kitakyuhojimachi 4-6-2.

The area is home to destinations such as Osaka Castle and the Dotonbori entertainment precinct, and is served by five subway lines.

The purchase price represents a 2.9 percent discount to the latest valuation of the hotels and equates to around 20 million yen ($182,000) per key, which the trust’s manager says is relatively low compared to some recent hotel deals in Osaka.

The statement indicates that the transaction will be fully funded by debt, and is expected to strengthen the trust’s cash flow through master leases for the hotels, providing a more stable income stream.

Distribution per stapled security is expected to rise 4.3 percent for the fiscal year 2017-18, when recent transactions in Seoul and Beijing are also taken into account.

 

Price: S$102m

Price per Key: S$182,000

THPT Comment: Ascendas Hospitality Trust, are really moving along. The Trust was listed in 2012 and currently manages a portfolio of some 4,000 rooms across Singapore, South Korea, and Australia in addition to Japan.

This past January, the vehicle sold its only Chinese assets — a pair of Beijing hotels — to a joint venture between US private equity firm TPG and NASDAQ-listed China Lodging Group (also known as Huazhu Hotels) for a total of RMB 1.18 billion ($186 million).

In April, the Trust made its first foray into South Korea by picking up a 98.7 percent in Seoul’s KY-Heritage Hotel Dongdaemun, while its sponsor Ascendas (Korea) Pte Ltd took the remaining stake. The deal for the 215-room hotel totalled $68.3 million.

First Seen: Mingtiandi