Ascendas Hospitality Trust has on June 15 entered into an agreement with ES-CON Japan via Ascendas Hospitality Real Estate Investment Trust (A-HReit) to acquire three hotels in Japan’s Osaka city for a purchase consideration of 10.29 billion Japanese yen (S$126.1 million).
The manager of the hospitality trust said that the acquisition of the three hotels, Hotel WBF Kitasemba West, Hotel WBF Kitasemba East and Hotel WBF Honmachi, will deepen its presence in Osaka, Japan’s third-largest city with a population of 2.7 million people.
The total acquisition cost is about 11.24 billion yen, comprising the purchase consideration, 102.9 million yen of acquisition fee payable to the Reit manager, and estimated professional fees and other transaction expenses of about 847.1 million yen.
The trust manager has made a total payment of 856.5 million yen as a deposit shortly after execution of the sale and purchase agreements. The balance of the purchase consideration is payable upon completion of the acquisition.
The aggregate purchase consideration represents a 2.9 per cent discount to the latest valuation of the hotels of 10.6 billion yen. The acquisition will be fully funded by debt and the trust manager projects the transaction to be accretive to stapled security holders of the trust. On a pro forma basis, the distribution per stapled security for FY2017/18 is expected to have increased by 4.3 per cent to 6.11 Singapore cents.
The acquisitions of Hotel WBF Kitasemba West and Hotel WBF Kitasemba East are expected to be completed by September 2018, while the acquisition of Hotel WBF Honmachi is expected to be completed by January 2019.
The hotels will be managed by an entity of White Bear Family, Co, which is part of a hospitality group established in 1977. The group’s businesses include travel agency, hotel management and car rental. White Bear Family operates close to 30 hotels across five cities in Japan, with 11 of these hotels located in Osaka.
Tan Juay Hiang, chief executive of the managers said: “Osaka is a key financial centre as well as a popular leisure destination, and inbound travel to the city has been on a strong growth trend. Domestic travel has also been healthy over recent years. We are confident that Osaka, as a gateway city, will continue to attract visitors across various segments.
“Osaka is a city we are familiar with and Ascendas Hospitality Trust’s acquisition of Sunroute Osaka Namba in 2014 has been highly successful, with the latest valuation more than double the purchase price. Given the strong fundamentals of its hospitality market, this is a city in which we are keen to deepen our presence.”