Ascott REIT's Sheraton Tribeca New York Hotel. (Photo: Sheraton Tribeca New York Hotel)Ascott REIT's Sheraton Tribeca New York Hotel. (Photo: Sheraton Tribeca New York Hotel)

Singapore-listed hospitality REIT, Ascott Residence Trust (Ascott REIT) (SGX:A68U), announced on 14 March that it will be acquiring a second property in New York for USD158.0 million (SGD218.0 million).

The property to be acquired is the 369-unit Sheraton Tribeca New York Hotel located in Manhattan, said to feature an occupancy of more than 90% in the past year. Upon acquisition, Sheraton Tribeca New York Hotel will continue to be managed under a franchise of the Sheraton brand.

“The accretive acquisition at an EBITDA yield of 6.8% is expected to increase Ascott REIT’s distribution income in FY 2015 by USD6.6 million, translating to a rise in distribution per unit from 7.99 cents to approximately 8.11 cents on a pro forma basis”, said the REIT in its statement.

“Ascott REIT has been acquiring quality assets valued at around SGD300 million to SGD500 million per annum in the past few years and expects to continue with this strong growth momentum”, said Lim Jit Poh, Ascott Residence Trust Management Limited’s (ARTML) Chairman.

“Our latest acquisition in New York will expand Ascott REIT’s portfolio to 90 properties with 11,667 apartment units, bringing us a step closer to achieving our target asset size of SGD6.0 billion by 2017”, said Lim, adding that the REIT will also actively seek for acquisition opportunities in Australia, Japan and Europe.

The REIT has said that it targets to increase its presence in the US to constitute up to 20% of its portfolio asset size by 2017.

To partially fund the acquisition, Ascott REIT has on the same day launched a private placement exercise that aims to raise no less than SGD100.0 million. Balance of the acquisition will be funded by debt.

Under the exercise, Ascott REIT will issue 94,787,000 new units to institutional and other investors at an estimated price of between SGD1.055 per unit and SGD1.085 per unit. Morgan Stanley is the placement agent and underwriter for the private placement.

Units of Ascott REIT last changed hands on the Singapore Exchange at SGD1.13.

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.