CapitaLand Ascott Trust (CLAS) has announced their plans to acquire lyf Funan Singapore, owned by Ascott Serviced Residence Global Fund (ASRGF), at an agreed value of $263 million. ASRGF, which owns Victory SR, will transfer 100% of their interest in lyf Funan Singapore to CLAS, with the latter’s sponsor, The Ascott Limited holding a 50% stake in ASRGF.
This deal was announced in a press release on Oct 1, where CLAS stated that the purchase consideration will be $146.4 million, mainly financed by the proceeds from the divestment of Citadines Mount Sophia Singapore, which was completed in March 2024. This divestment was made to a joint venture between Weave Living, a Hong Kong-based accommodation company, and Blackrock, a global asset manager, for $148 million.
Upon completion of the proposed acquisition, CLAS will enter into a master lease agreement with Ascott for lyf Funan Singapore, subject to approval at an extraordinary general meeting scheduled in November. The master lease agreement will have a term of 20 years, with the option to renew for an additional five years. Under this agreement, the master lessee will pay rent equivalent to 93.56% of the property’s gross operating profit.
This acquisition is expected to enhance CLAS’s total distribution by $3.5 million, resulting in a 1.5% increase in their distribution per stapled security (DPS) on a pro forma basis for FY2023. In addition, the ebitda yield on the acquisition is estimated to be 4.7% for FY2023.
According to CLAS, lyf Funan Singapore maintained an average occupancy rate of over 80% in the first half of 2024. With this acquisition, CLAS will have a total of five properties in Singapore, accounting for 19% of its global assets. The 329-key lyf Funan Singapore, which opened in 2019, caters to both short-stay and extended-stay guests. Located within the Funan integrated development, the property is directly connected to the City Hall MRT interchange station.