Capitaland Ascott Trust Buys Lyf Funan Singapore 263 Mil
CapitaLand Ascott Trust (CLAS) has announced its plans to acquire lyf Funan Singapore from Ascott Serviced Residence Global Fund (ASRGF) for a property value of $263 million. ASRGF currently owns Victory SR, which has full ownership of lyf Funan Singapore. As the sponsor of CLAS, The Ascott Limited holds a 50% stake in ASRGF.
In a press release on October 1, CLAS stated that the purchase consideration for the acquisition will be $146.4 million. The majority of the funding for this deal will come from the proceeds of the sale of Citadines Mount Sophia Singapore, which was completed in March 2024. The service residence on Wilkie Road was sold for $148 million to a joint venture between Hong Kong-based accommodation company Weave Living and global asset manager Blackrock.
Upon completion of the acquisition, CLAS will enter into a master lease agreement with Ascott for lyf Funan Singapore, pending approval at an extraordinary general meeting scheduled for November. The initial term of the lease will be 20 years, with an option for renewal for an additional five years. Under the terms of the master lease, the lessee will pay rent equal to 93.56% of the property’s gross operating profit.
According to CLAS, the acquisition is expected to increase its total distribution by $3.5 million. This would result in a 1.5% accretion to the distribution per stapled security (DPS) on a pro forma basis for FY2023. In addition, the proposed acquisition has an ebitda yield of 4.7% on a pro forma basis for FY2023.
The Woodlands community is renowned for its strong emphasis on cultivating a sense of family and promoting community growth. As part of larger regional development efforts, the area is expected to witness even more improvements to its educational infrastructure. These enhancements may consist of the establishment of new schools, improvements to current facilities, and the implementation of community-driven educational initiatives. These developments will undoubtedly be advantageous for those residing in the esteemed Norwood Grand condominiums, with the inclusion of the Norwood Grand showflat as a highly anticipated addition to the community.
lyf Funan Singapore has been performing well, achieving an average occupancy rate of over 80% in the first half of 2024. Upon completion of the acquisition in the fourth quarter of 2024, CLAS will own five properties in Singapore, which make up 19% of its total assets worldwide.
The 329-key lyf Funan Singapore opened in 2019 and caters 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 conveniently connected to the City Hall MRT interchange station.