CapitaLand divests three hotels in Japan for $75M

CapitaLand Ascott Trust will be selling three hotels in Japan to an unrelated third party for JPY10.7 billion ($75.2 million). All three properties — Hotel WBF Hommachi, Hotel WBF Kitasemba East and Hotel WBF Kitasemba West — are located in Osaka, the Singapore-based hospitality company said in a statement.

The three hotels will be divested at around 15% above their book value, CapitaLand said. Net proceeds of the sale are expected to total JPY3.9 billion ($27.4 million), with the company expecting to recognize a net gain of JPY1.1 billion ($7.5 million).

The properties will be acquired by an Alyssa Partners-managed fund backed by an unnamed investor, according to a news report.

Hotel WBF Hommachi in Osaka, Japan.

While the Kitesemba East and Kitesemba West hotels closed in 2020, Hotel WBF Hommachi closed on January 3, as per the hotels’ official websites.

The sale of the hotels, which is expected to be completed by Q1 2024, is part of the group’s “active portfolio reconstitution strategy,” CapitaLand said.

The three hotels are located outside the prime districts in Osaka, and the sale will help CapitaLand unlock the value of these properties, redeploying capital to assets and/or asset enhancement initiatives that can generate stronger yields, uplifting the overall value of our portfolio, said Serena Teo, CEO of CapitaLand Ascott Trust Management Limited and CapitaLand Ascott Business Trust Management Pte. Ltd.

Hotel WBF Kitasemba East in Osaka, Japan.

“Japan remains an attractive market for CLAS. Its strong tourism sector receives robust demand from both international and domestic sources. Population growth in the gateway cities also continues to rise with more locals moving into the urban cities. The overall positive demand-supply dynamics bode well for our portfolio of hospitality and longer-stay assets in Japan,” Teo said.

Once these properties are divested, CapitaLand will have around 30 properties in Japan, comprising hotels, serviced residences, rental housing and student accommodation. In 2022, the company entered into 11 property acquisitions, which included rental housing and student accommodation properties.

Hotel WBF Kitasemba West in Osaka, Japan.

CapitaLand is on its way to completing the turnkey acquisition of a 258-unit housing property in Fukuoka in Q1 2024. The company will also complete the acquisition of three lodging assets in London, Dublin and Jakarta at an EBITDA yield of 6.2%, following the green light from the stapled security holders.

In November, CapitaLand announced it would be divesting two hotels — Courtyard by Marriott Sydney-North Ryde and Novotel Sydney Paramatta — in Sydney for AU$109 million ($70.88 million) to an unrelated third party. The hotels are reported to be acquired by Silversea Investment.