ASCOTT Residence Trust : HMN 0% (ART) on Monday (Aug 15) proposed the acquisition of 9 serviced residences, rental housing and student accommodation properties from its sponsor, The Ascott Limited, across 5 markets: Australia, France, Japan, the US and Vietnam.

The aggregate purchase consideration is S$215.2 million and the estimated total capitalised cost is S$318.3 million, the stapled hospitality group’s managers said in bourse filings before the market open. The acquisition will increase ART’s distribution by S$9.2 million and its pro forma FY2021 distribution per stapled security by 2.8 per cent.

The trust also launched a private placement on Monday to raise S$150 million, with the offer of new stapled securities to be made to eligible institutional, accredited and other investors. The issue price will range between S$1.110 and S$1.140 per new stapled security, representing a 2.8 per cent to 5.4 per cent discount to ART’s S$1.1733 volume-weighted average price.

ART will tap S$122.3 million of the placement proceeds to partly fund the S$215.2 million consideration for the properties. Another S$25.3 million from the placement will partly fund any future potential acquisitions, while S$2.4 million will be spent on professional and other expenses.

The acquisition of the 9 assets is expected to be completed by November, subject to securityholders’ approval at an extraordinary general meeting to be held on Sep 9.

Three of the assets are serviced residences - Quest Cannon Hill in Brisbane, Australia and La Clef Tour Eiffel Paris in France that are on master leases; and Somerset Central TD Hai Phong City in Vietnam. The latter caters mainly to corporate guests and has an average length of stay of about 11 months.

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La Clef Tour Eiffel Paris has an occupancy rate of 80 per cent, while those of Quest Cannon Hill and Somerset Central TD Hai Phong City stand at 95 per cent and over 90 per cent respectively.

ART also plans to buy 5 rental housing properties in Japan that have lease tenures of about 2 years. They are located in Kyoto, Osaka, Hyogo and Nagoya.

Over in the US, ART is doubling its stake in Standard at Columbia, acquiring an additional 45 per cent stake in the student accommodation property. Currently under development, Standard at Columbia is slated for completion in Q2 2023.

“The addition of the 5 rental housing properties in Japan and a student accommodation property in the US will increase the proportion of our longer-stay portfolio from 17 per cent to 19 per cent of ART’s total portfolio value. This will bring us closer to our target of 25-30 per cent for longer-stay assets in the medium term,” said Serena Teo, CEO of ART’s managers.

The 9 assets, comprising 1,018 units, will grow ART’s total assets to S$8.3 billion as at end-2021 on a pro forma basis. Post-acquisition, ART will have a gearing of 38.5 per cent.

Some 92 per cent of the 9 assets’ gross profit are from stable income sources, which include master leases, management contracts with minimum guaranteed income and management contracts of rental housing and student accommodation. This will raise ART’s total proportion of stable income from 69 per cent to 71 per cent of its gross profit.

ART closed at S$1.18 on Friday, up 0.9 per cent or S$0.01 before requesting a trading halt on Monday prior to the announcement. It will resume trading on Tuesday morning.