ART Expands Into Tokyo's Rental Housing Market
Singapore – Ascott Residence Trust (ART) has signed a conditional sales and purchase agreement to acquire 18 rental housing properties in Tokyo from a local private equity firm for a total purchase price of ¥12.2 billion (S$158.6 million). The properties comprise a total of 509 units in eight wards in Tokyo, namely Shinjuku, Bunkyo, Meguro, Setagaya, Nakano, Suginami, Nerima and Taito Ku.
The properties are acquired at an estimated annualised property yield of
4.1% in the forecast year 2008. The transaction will be funded by
borrowings, which will bring ART’s gearing to 36.8%. This is well within
the 60% gearing limit allowable under the Monetary Authority of
Singapore’s property fund guidelines.
Upon legal completion, all 18 rental housing properties will be managed by
Ascott International Management Japan Co. Ltd (AIM Japan). AIM Japan
is a 60:40 joint venture between The Ascott Group Ltd and Mitsubishi
Estate Co. Ltd, one of Japan’s largest and leading real estate developers.
Mr Lim Jit Poh, Chairman of Ascott Residence Trust Management Limited
(ARTML), said: “The expansion of ART’s portfolio to include more rental
housing properties is in line with its investment mandate to acquire yield
accretive and quality serviced residence and rental housing assets. Japan
enjoys an established and growing rental housing market as owner-
occupancy of residential properties is relatively low. According to the
Tokyo Metropolitan Government, half of Japan’s publicly listed
corporations are headquartered in Tokyo, and numerous Fortune Global 500
companies have established their Asian regional subsidiaries in the city.
Thus ART’s acquisition of 18 properties in Tokyo’s most populous wards
will offer investors added exposure to the strong rental housing market in
one of the world’s most important economic centres.”
Mr Chong Kee Hiong, ARTML’s Chief Executive Officer, said: “The
longer tenancy leases of the rental housing model and high average
occupancy of 90% across the 18 properties ART is acquiring provide good
income stability and potential for organic growth in ART’s Japan and
overall portfolio. In addition, ART will be able to enlarge the customer base
for its Tokyo portfolio as it now offers both serviced residence and rental
housing options to cater to a wider range of budgets and customer needs.”
He added: “Rental housing is an integral part of the long stay accommodation market and is an attractive investment proposition in more developed economies. ART’s diversified portfolio will now comprise 22% rental housing units and 78% serviced residence units. With this acquisition, ART’s length of stay profile will improve from an average of seven months to eight months1. ”
Description of Properties
The 18 freehold rental housing properties have an average age of 18 months and a total net lettable area of 13,318 square metres. The properties comprise purpose-built studio and one-bedroom apartment units which are popular with the growing singles customer segment. All 18 properties are within walking distance to the Tokyo subway, other public transportation, restaurants and supermarkets.
The apartments are currently managed under a mixture of four local rental housing brands, namely Zesty, Joy City, Gala and Asyl Court. All are well equipped with broadband internet access, security access phones, air-conditioners, fully-fitted kitchens, built-in wardrobes and water heaters. The table below provides more information about the 18 properties:
No. Property Name Ward No. of Units
1. Zesty Akebonobashi Shinjuku 12
2. Zesty Gotokuji Setagaya 15
3. Zesty Higashi Shinjuku Shinjuku 19
4. Zesty Kagurazaka I Shinjuku 20
5. Zesty Kagurazaka II Shinjuku 20
6. Zesty Kasugacho Nerima 32
7. Zesty Koishikawa Bunkyo 15
8. Zesty Komazawa II Meguro 29
9. Zesty Nishi Shinjuku III Shinjuku 29
10. Zesty Sakura Setagaya 17
11. Zesty Shin Ekoda Nerima 18
12. Zesty Shoin Jinja Setagaya 16
13. Zesty Shoin Jinja II Setagaya 17
14. Joy City Koishikawa Bunkyo 36
15. Joy City Kuramae Taito 60
16. Gala Hachimanyama I Suginami 76
17. Gala Hachimanyama II Suginami 16
18. Asyl Court Nakano Sakaue Nakano 62
Total 8 wards 509
ART’s existing properties in Japan are Somerset Azabu East and Somerset Roppongi, located in Tokyo’s Minato ward. Upon completion of the acquisition, ART’s total portfolio value will stand at S$1.34 billion, comprising 3,463 units in 36 properties in 10 cities across seven countries. ART’s assets in Japan will make up 21% of the total portfolio value, an increase
from 11% before this acquisition.
1 Based on apartment rental income by length of stay of customers for the period YTD September 2007.
About Ascott Residence Trust
Ascott Residence Trust (ART) is the first pan-Asian serviced residence real estate investment trust, and was established with the objective of investing primarily in real estate and real estate-related assets which are income-producing and which are used or predominantly used, as serviced residences or rental housing properties in the pan-Asian region.
Comprising an initial asset portfolio of 12 strategically located properties in seven pan-Asian cities, ART was listed with an asset size of about S$856 million. Upon completion of the latest acquisitions, ART’s portfolio will expand to S$1.34 billion, comprising 36 properties with 3,463 units in 10 cities across seven countries.
Launched in March 2006, ART is managed by the Ascott Residence Trust Management
Limited, a wholly-owned subsidiary of The Ascott Group Limited (Ascott). Listed on the Main Board of the Singapore Exchange, Ascott is the largest international serviced residence owner-operator outside the United States, with over 19,500 serviced residence units in key cities of Asia Pacific, Europe and the Gulf region. Ascott boasts a 23-year industry track record and serviced residence brands that enjoy recognition worldwide.
For more information about ART, please visit www.ascottreit.com.
A Member of The Ascott Group
The value of units in ART and the income derived from them may fall as well as rise. Units in ART are not obligations of, deposits in, or guaranteed by the Manager or any of its affiliates. An investment in the units in ART is subject to investment risks, include the possible loss of the principal amount invested. The past performance of ART is not necessarily indicative of its future performance.
This announcement may contain forward-looking statements that involve risks and
uncertainties. Actual future performance, outcomes and results may differ materially from those expressed in forward-looking statements as a result of a number of risks, uncertainties and assumptions. Representative examples of these factors include (without limitation) general industry and economic conditions, interest rate trends, cost of capital and capital availability, competition from similar developments, shifts in expected levels of property rental income, changes in operating expenses, including employee wages, benefits and training, property expenses and governmental and public policy changes and the continued availability of financing in the amounts and the terms necessary to support future business. Investors are cautioned not to place undue reliance on these forward-looking statements, which are based on the current view of the Manager on future events.
Investors have no right to request the Manager to redeem their units in ART while the units in ART are listed. It is intended that unitholders may only deal in their units in ART through trading on the SGX-ST. Listing of the units in ART on the SGX-ST does not guarantee a liquid market for the units in ART.
Ascott Residence Trust Management Limited
8 Shenton Way, #13-01, Singapore 068811
Tel : (65) 6389 9388 Fax : (65) 6389 9399
For more information, please contact: Media Celina Low, Vice President, Corporate Communications Tel: (65) 6586 0475 Hp: (65) 96825458 Email: firstname.lastname@example.org Huang Peiling, Senior Manager, Corporate Communications Tel: (65) 6586 0479 Hp: (65) 98453361 Email: email@example.com Analyst Lilian Goh, Investor Relations Tel: (65) 6586 7231 Hp: (65) 97955225 Email: firstname.lastname@example.org In relation to the preferential offering by The Ascott Group Limited of units in Ascott Residence Trust, J.P. Morgan (S.E.A.) Limited acted as the Joint Financial Adviser, Sole Global Coordinator and Sole Lead Underwriter.