Singapore’s Ascott Residence Trust (Ascott REIT) (SGX: A68U), a unit of CapitaLand Limited (ADR)(OTC: CLLDY), said it acquired the 369-room Sheraton Tribeca New York Hotel from FC-Canal Ground Tenant LLC for $158 million. This is Ascott Reit’s second acquisition in New York in less than a year.
The acquisition involves the leasehold interest in the land of the 21-story Sheraton Tribeca property expiring in 2112 and a sub-leasehold interest expiring in 2105. The improved hotel land parcel at 350 Canal Street, New York, N.Y., is located on the border of Tribeca and Soho, and is listed as a portfolio property of Lexington Realty Trust (NYSE: LXP). The Sheraton Tribeca was built in 2010.
“Ascott Reit has been acquiring quality assets valued at around S$300 million to S$500 million per annum in the past few years and expects to continue with this strong growth momentum,” said Lim Jit Poh, chairman, Ascott Residence Trust Management Ltd.(ARTML). “Our latest acquisition in New York will expand Ascott Reit’s portfolio to 90 properties with 11,667 apartment units, bringing us a step closer to achieving our target asset size of S$6.0 billion by 2017. Besides the United States of America, we will actively seek accretive acquisitions in key cities of markets such as Australia, Japan and Europe.”
“In 4Q 2015, our maiden acquisition in New York, Element New York Times Square West, was the biggest contributor to revenue growth. With our second acquisition in New York, will make up 10% of our asset size, and Asia Pacific and Europe will constitute 63% and 27% respectively,” said ARTML’s CEO Ronald Tay.
“We target to increase our presence in the United States of America to constitute up to 20% of our asset size by 2017. Our long-term strategy in the United States of America is to acquire a scalable portfolio of stable, operating assets, with an initial target of key gateway cities along the Eastern Seaboard,” added Tay. “Sheraton Tribeca New York Hotel has been achieving strong occupancy of more than 90% in the past year and average daily rate has been growing steadily since its opening in October 2010. Following the acquisition, the hotel will continue to be managed by FC-Canal Management LLC.”
The accretive acquisition at an EBITDA yield of 6.8% is expected to increase Ascott Reit’s distribution income in FY 2015 by $6.6 million.
The acquisition will be partly funded through a private placement of S$100 million, and the balance through debt. Morgan Stanley is the placement agent and underwriter for the private placement, but is not advising Ascott on the hotel acquisition.
Jones Lang LaSalle Americas (JLL) conducted the property valuation for Ascott Reit.
Ascott Reit’s asset size has quadrupled to S$4.7 billion since it became publicly traded in 2006. The REIT’s international portfolio comprises 89 properties with 11,298 units in 38 cities across 14 countries in the Americas, Asia Pacific and Europe. Ascott Reit was awarded ‘Best REIT (Asia)’ by World Finance magazine at its Real Estate Awards in 2015.
Ascott Reit’s serviced residences are mostly operated under the Ascott, Citadines and Somerset brands. They are mainly located in key gateway cities such as Barcelona, Berlin, Brussels, Guangzhou, Hanoi, Ho Chi Minh City, Jakarta, Kuala Lumpur, London, Manila, Melbourne, Munich, New York, Paris, Perth, Shanghai, Singapore and Tokyo.
Ascott Reit is managed by ARTML, a wholly owned subsidiary of The Ascott Limited and an indirect wholly owned subsidiary of CapitaLand Limited (ADR)(OTC: CLLDY), one of Asia’s largest real estate companies, headquartered and listed in Singapore.
CapitaLand’s diversified global real estate portfolio includes integrated developments, shopping malls, serviced residences, offices and homes. Its two core markets are Singapore and China, while Indonesia, Malaysia and Vietnam have been identified as new growth markets. The company also has one of the largest real estate fund management businesses with assets located in Asia. The company was formerly known as Pidemco Land Limited and changed its name to CapitaLand Limited in November 2000. CapitaLand was founded in 1989. CapitaLand has a market capitalization of $9.47 billion.