Upon completion of the proposed acquisition, CLAS will enter into a master lease with The Ascott Limited for lyf Funan Singapore (Picture: CapitaLand Ascott Trust)
CapitaLand Ascott Trust (CLAS) has entered into an agreement with Ascott Serviced Residence Global Fund (ASRGF) to acquire lyf Funan Singapore at an agreed property value of $263 million. ASRGF owns Victory SR, which has a 100% interest in lyf Funan Singapore.
CLAS’s sponsor, The Ascott Limited, holds a 50% stake in ASRGF.
In an Oct 1 press release, CLAS says the purchase consideration for the deal will be $146.4 million and will be largely funded d by the proceeds from the divestment of Citadines Mount Sophia Singapore which was completed in March 2024. A joint venture comprising Hong Kong-based accommodation company Weave Living and global asset manager Blackrock purchase the service residence on Wilkie Road for $148 million.
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Upon completion of the proposed acquisition, CLAS will enter into a master lease with Ascott for lyf Funan Singapore, subject to approval at an extraordinary general meeting scheduled in November. The master lease will have an initial term of 20 years and can be renewed for a further five-year period. The master lessee will pay rent amounting to 93.5% of the property's gross operating profit.
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The proposed acquisition is expected to increase CLAS’s total distribution by $3.5 million or a 1.5% accretion to its distribution per stapled security (DPS) on a FY2023 pro forma basis. The ebitda yield on the proposed acquisition is 4.7% on a pro forma basis for FY2023 as well.
According to CLAS, lyf Funan Singapore achieved an average occupancy rate of over 80% in 1H2024. Following the transaction's completion, targeted in 4Q2024, CLAS will have five properties in Singapore, making up 19% of its total assets worldwide.
The 329-key lyf Funan Singapore opened in 2019, catering to both short-stay and extended-stay guests. It is part of the Funan integrated development which also includes retail and office components. The property is directly linked to the City Hall MRT interchange station.