Ascott Residential Trust to buy 60% interest in Citadines Shinjuku

The company invests in the property which is conveniently located near Marunouchi and Toei Shinjuku subway lines, and entertainment, retail and food & beverage outlets.

Ascott Residence Trust (Ascott Reit) has entered into a conditional sale and purchase agreement to acquire 60% interest in the 160-unit Citadines Shinjuku Tokyo (Citadines Shinjuku) from Mitsubishi Estate Co., Ltd and Citadines Shinjuku Ippan Shadan Hojin for a total sum of ¥2.7 billion (or approximately S$45.7m). The balance 40% interest is held by The Ascott Limited (Ascott). 

Mr Lim Jit Poh, Ascott Residence Trust Management Limited’s (ARTML) Chairman, said: “The acquisition of Citadines Shinjuku is a rare opportunity to add a quality purpose-built serviced residence in Tokyo. Tokyo is an important global financial centre and popular tourist destination. Business and leisure arrival numbers into the city from the Japan National Tourism Organisation have shown encouraging signs of a gradual return of business and leisure travel following the earthquake and tsunami crisis. We are acquiring Citadines Shinjuku at an opportune time, and believe its operating performance will improve in tandem with the improving business conditions in Japan.” 

Mr Chong Kee Hiong, ARTML’s Chief Executive Officer, said: “The acquisition of Citadines Shinjuku is yield accretive to Ascott Reit at an implied property yield of 4.5%. Newly-opened for less than three years, the freehold serviced residence is located in the prime Shinjuku area in Tokyo. The area is popular with corporate and leisure travellers who like the vibrant Shinjuku East locale. The property is conveniently located as it enjoys proximity to the Marunouchi and Toei Shinjuku subway lines, and entertainment, retail and food & beverage outlets.” 

Mr Chong added, “The acquisition will be wholly funded by borrowings. Ascott Reit’s healthy balance sheet has again allowed us to seize acquisition opportunities. Following this transaction, Ascott Reit’s gearing will be at 42%, which is still within our optimal gearing level of 45%, with an interest cover ratio (ICR) of more than three times.” 

Ascott Reit currently owns two serviced residences, Somerset Azabu East and Somerset Roppongi, and 18 rental housing properties in Tokyo, Japan. Upon completion of the acquisition, Ascott Reit’s assets in Japan will make up 12.1% of the enlarged total portfolio value of S$2.76 billion, according to an Ascott Reit report. 

Citadines Shinjuku is a 12-storey building with one basement and comprises 160 apartments. The freehold property has a gross floor area of approximately 6,197 square metres. It is located within walking distance of the Shinjuku East area, one of Tokyo’s thriving urban centres. The contemporary serviced residence enjoys a prime location close to the Marunouchi and Toei Shinjuku subway lines. It is conveniently situated near restaurants, supermarkets, shopping malls and Shinjuku Gyoen National Garden. 

Citadines Shinjuku was completed and opened for operations in March 2009. Each serviced residence apartment is furnished with a fully-equipped kitchen, stylish interiors and modern amenities ensuring a home-away-from-home experience for the guest. The property also offers facilities such as a gym, 24-hour reception and security. 

Citadines Shinjuku is currently managed by Ascott International Management (Japan) Company Limited (AIM Japan) and will continue to be managed by AIM Japan following the acquisition.