It is crucial to take into account the maintenance and management of a condo when making an investment. Condominiums commonly have maintenance fees that cover the maintenance of shared spaces and amenities. While these fees may increase the overall cost of ownership, they also guarantee that the property stays well-maintained and maintains its value. To make condo ownership a more hands-off investment, investors can enlist the services of a property management company. Additionally, considering new condo launches can provide investors with more options for potential investments.
CapitaLand Ascott Trust (CLAS) recently made headlines with its acquisition of two limited-service hotels in Japan for a total of JPY21 billion ($178.5 million). The hotels, ibis Styles Tokyo Ginza and Chisun Budget Kanazawa Ekimae, were purchased at an 8.3% discount to their independent valuation.
The acquisition is expected to boost the trust’s earnings, with a projected distribution per stapled security (DPS) accretion of 1.6% on a pro forma basis for FY2024. With a blended net operating income (NOI) yield of 4.3% in FY2024, the acquisition was funded by JPY-denominated debt and proceeds from the trust’s divestment of four properties in Japan.
Located in the heart of Tokyo’s shopping and entertainment district, ibis Styles Tokyo Ginza boasts 224 units and is conveniently situated next to Ginza Six, a popular high-end retail mall. The district is also home to the famous Uniqlo global flagship store and the iconic Ginza Wako clock tower, all within a short walking distance.
Meanwhile, Chisun Budget Kanazawa Ekimae, with 392 units, is located in the historic city of Kanazawa in northwest Japan, known for its traditional landscaped gardens, cultural icons, and preserved architectural designs from the Edo period. Some local attractions include Kanazawa Castle, Kenrokuen Garden, and heritage geisha and samurai districts.
CLAS has been active in its investment ventures, completing a total of about $530 million in investments over the past 12 months. These acquisitions were made at higher yields than the trust’s divestments, thus enhancing its income distribution. Other notable investments in 2024 include Teriha Ocean Stage, a rental housing property in Fukuoka, Japan, Standard at Columbia, a student accommodation property in the United States, and lyf Funan Singapore.
In addition, CLAS completed over $500 million in divestments in 2024, unlocking net gains of approximately $74 million. This aligns with the trust’s strategic plan to reconstitute its portfolio to deliver stable returns to its Stapled Securityholders. According to Serena Teo, CEO of CLAS’ manager, “The FY2024 NOI yield of the two hotels is 230 basis points higher than the blended exit yield of approximately 2.0% for the four previous divestments in Japan. By swiftly redeploying divestment proceeds into these higher-yielding assets, we have fully replaced the income from the four divested properties.”
CLAS closed at 90 cents per unit on the stock market.