Somerset Xu Hui Shanghai. (Ascott Residence Trust)

Ascott Residence Trust (ART) is acquiring three freehold rental housing properties in central Sapporo from unrelated third parties for JPY6.78 billion (SGD85.2 million).

The assets are namely City Court Kita 1 jo, Big Palace Minami 5 jo, and Alpha Square Kita 15 jo.

“ART’s acquisitions of these rental housing properties will increase our presence in the longer-stay accommodation segment and diversify from hospitality assets which are facing headwinds due to COVID-19, further enhancing income stability”, said Bob Tan, Chairman of ART’s manager.

“With the acquisitions, our student accommodation and rental housing portfolios will expand to about 8% of our total property value. We aim to grow it to about 15% - 20% in the medium term”, he added.

The average EBITDA yield of the three acquisitions is approximately 4%.

The transactions are expected to complete by the end of June 2021, and will be funded by debt and part of the net proceeds from recent divestments.

On 27 May 2021, ART successfully completed the divestment of Somerset Xu Hui Shanghai to an unrelated third party for RMB1.05 billion.

The divestment price was 171% above the property’s book value and the exit yield was approximately 2%.

Through the transaction, ART has received net proceeds of about RMB953.9 million (SGD196.8 million) and realised a net divestment gain of about RMB 582.6 million.

On a FY 2020 pro forma basis, ART’s distribution per stapled security is expected to increase by 2.6% with its latest acquisition.

The trust’s full statement on the acquisition can be viewed here.

ART was last done on the Singapore Exchange at SGD1.01, which implies a distribution yield of 3.94% according to data compiled on the Singapore REITs table.

By Shariffa Al-Habshee

Shariffa joined REITsWeek in 2017, and monitors Asia-Pacific REITs for the publication.