The 380-unit Citadines on Bourke Melbourne (Photo: Citadines)The 380-unit Citadines on Bourke Melbourne (Photo: Citadines)

Singapore-listed hospitality REIT, Ascott Residence Trust (Ascott REIT) (SGX:A68U), announced on 25 June that it will be acquiring three serviced residences and four rental housing properties in Australia and Japan for SGD298.3 million.

“These accretive acquisitions are expected to increase Ascott REIT’s distribution income for FY 2014 by SGD3.9 million and distribution per unit by 2.9% from 8.20 cents to 8.44 cents on a pro forma basis”, said the REIT in a statement on the acquisition.

The properties are namely the freehold lease 380-unit Citadines on Bourke Melbourne (SGD167.6 million), a remaining 40% interest in the 160-unit Citadines Shinjuku Tokyo (SGD33.7 million) and 124-unit Citadines Karasuma- Gojo Kyoto (SGD16.0 million) and four rental housing properties in Osaka (SGD81.0 million).

“These yield accretive acquisitions will expand Ascott REIT’s portfolio in the stable and established markets of Australia and Japan where there is significant potential for us to grow”, said Lim Jit Poh, chairman of Ascott REIT’s manager.

“The seven prime assets with 1,152 apartment units will broaden Ascott REIT’s earning base and increase our scale to 11,368 apartment units in 95 properties across 39 cities, further diversifying our portfolio across key cities globally”, he added.

Ascott REIT has indicated that the acquisitions will be financed by debt and funds raised from the issue of perpetual securities. The REIT’s gearing is expected to increase from 38.5% to 39.5% post-acquisition.

Units of Ascott REIT traded in a tight range on the Singapore Exchange on the day of the announcement and closed unchanged from the previous trading day at SGD1.28.

The 380-unit Citadines on Bourke Melbourne (Photo: Citadines)
The 380-unit Citadines on Bourke Melbourne (Photo: Citadines)

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.