Singapore-listed Hospitality REIT Ascott Residence Trust (Ascott REIT) (SGX:A68U) has announced its intention to acquire three serviced residence properties in China and 11 rental housing properties in Japan into the REIT for a purchase worth S$165.0 million in totality.

The acquisition would increase Ascott REIT's asset base from S$2.8 billion to S$3.1 billion

All properties targeted for acquisition are currently under subsidiaries or associated companies of Ascott. The 3 properties in China are namely Somerset Heping Shenyang, Citadines Biyun Shanghai and Citadines Xinghai Suzhou.
The rest of the 11 are various freehold housing apartments located across the cities of Fukuoka, Sapporo, Sendai, Kyoto, Saga and Hiroshima.

The acquisitions are expected to be yield-accretive, contributing an additional annual EBITDA of S$15.6 million and increasing the distributable income by S$14.0 million for the financial year. Consequently DPU for the year is expected to increase by 2.9 percent to 9.01 cents from 8.76 cents previously.

Besides increasing yield, the acquisitions are also expected to strengthen Ascott REIT's presence in Asia, particularly in its target growth cities of China. Ascott REIT’s portfolio would immediately increase by 1,576 available apartment units to 8,632 apartment units. This represents an increase in asset base of about 11 percent from S$2.8 billion currently to S$3.1 billion.

The acquisitions will be funded with the S$147.8 million raised from a placement of 114 million new units last February. The rest will be financed via existing debt facilities.

Units of Ascott REIT are currently trading slightly higher from its previous close at S$1.41.

By Ridzwan Rahmat

Ridzwan has been analysing REITs and business trusts since 2008, and personally manages a portfolio comprising mainly of SGX-listed REITs. He founded REITsWeek in 2013.