Ascott Residence Trust (ART) will invest about JPY 10.4 billion (S$125.0 million) to acquire four rental housing properties and its first student accommodation property in Japan. The yield-accretive acquisitions are set to increase ART’s pro forma FY 2021 Distribution per Stapled Security by approximately 1.7%.
The average NOI yield is expected to be about 4.0%. The five properties will be acquired on a turnkey basis from two different sellers on a willing buyer and willing seller basis. The transactions are expected to be completed between 1Q 2022 and 2Q 2023.
With these latest acquisitions, ART has invested about S$905 million in longer-stay properties since January 2021. The acquisitions of the five freehold rental housing and student accommodation properties will increase ART’s longer-stay properties to 17% of its total portfolio value. ART is on track to meet its medium-term target of 25-30% for its longer-stay properties, strengthening the resilience of ART’s portfolio.
Three of the rental housing properties are located in Central Osaka, the economic and logistics centre of Japan while one rental housing property is located in Fukuoka, one of the fastest growing cities in the country. The student accommodation property in Osaka serves the main campus of Kindai University (KU), which is just a two-minute walk away. KU has over 30,000 undergraduate students.
The first student accommodation property in Japan adds to the company’s quality portfolio of eight student accommodation properties in the USA. It is located close to a highly reputable university with a large student population, and there is limited competing supply. The property in Japan is under a 15-year master lease with the largest student accommodation operator in the country, generating stable income for ART.