ART Buys Rental Apartments In Tokyo

Source : The Business Times, November 13, 2007

ASCOTT Residence Trust (ART) is acquiring more than 500 rental apartments in 18 blocks in Tokyo for 12.2 billion yen (S$158.6 million).

More choice for customers: ART now offers both serviced residence and rental housing options to cater to a wider range of budgets and customer needs. Its existing properties in Japan include Somerset Roppongi (above), located in Tokyo's Minato ward

The properties, the subject of a conditional sales and purchase agreement, are being acquired from a private equity firm. There are a total of 509 units in eight wards in Tokyo - Shinjuku, Bunkyo, Meguro, Setagaya, Nakano, Suginami, Nerima and Taito Ku. They are all freehold and have an average age of 18 months. Total net lettable area is estimated at 13,318 square metres.

The newly purchased properties include purpose-built studio and one-bedroom apartment units which are popular with an increasing number of singles customers. Each of the 18 sites is within walking distance of the Tokyo subway, other public transportation, restaurants and supermarkets.

The apartments are currently managed under a mixture of four Japanese rental housing brands - Zesty, Joy City, Gala and Asyl Court.

All of them have broadband Internet, security access phones, air-conditioners, fully-fitted kitchens, built-in wardrobes and water heaters. ART said in a statement yesterday that the properties were acquired at an estimated annualised property yield of 4.1 per cent in the forecast year 2008.

The transaction will be funded by borrowings, which will bring ART's gearing to 36.8 per cent, well within the 60 per cent gearing limit allowed under the Monetary Authority of Singapore's property fund guidelines.

Upon legal completion, all 18 rental housing properties will be managed by Ascott International Management Japan (AIM Japan), a 60:40 joint venture between The Ascott Group and Mitsubishi Estate Co, a major real estate developer in Japan.

Chong Kee Hiong, ARTML's chief executive officer, said: 'The longer tenancy leases of the rental housing model and high average occupancy of 90 per cent across the 18 properties ART is acquiring provide good income stability and potential for organic growth in ART's Japan and overall portfolio.

'In addition, ART will be able to enlarge the customer base for its Tokyo portfolio as it now offers both serviced residence and rental housing options to cater to a wider range of budgets and customer needs.'

With the latest purchase, ART's diversified portfolio now comprises 22 per cent rental housing units and 78 per cent serviced residence units. Its length-of-stay profile will improve from an average of seven months to eight.

ART's existing properties in Japan are Somerset Azabu East and Somerset Roppongi, located in Tokyo's Minato ward.

Upon completion of the acquisition, ART's total portfolio value will stand at S$1.34 billion, comprising 3,463 units in 36 properties in 10 cities across seven countries.