CapitaLand Ascott Trust proposes to divest Citadines Central Shinjuku Tokyo for JPY25 billion at about 100% premium above book value

CapitaLand Ascott Trust (CLAS) is proposing to divest Citadines Central Shinjuku Tokyo for JPY25 billion (S$222.7 million^[1]). The proposed divestment is at about 100% premium over the book value^[2] and approximately 40.4% premium to the average of two independent valuations^[3]. The exit earnings before interest, taxes, depreciation and amortisation (EBITDA) yield is 3.2%^[4]. The divestment will unlock an estimated net gain after tax of JPY5.7 billion (S$50.8 million) and generate net proceeds of approximately JPY21 billion (S$187.4 million).

The divestment is part of CLAS’ portfolio reconstitution strategy. CLAS can redeploy capital into more effective uses such as repaying higher-interest debt, funding asset enhancement initiatives (AEIs), reinvesting in higher-yielding properties and/or for general corporate purposes. It also enhances CLAS’ financial flexibility to distribute divestment gains or mitigate the short-term impact of AEIs or macroeconomic downturns, when appropriate. CLAS will seek Stapled Securityholders’ approval for the divestment at an Extraordinary General Meeting scheduled for September 2025. The transaction is expected to be completed by 4Q 2025.

Assuming the net proceeds are used to repay debt, and after accounting for the loss of income from the divestment, Distribution per Stapled Security (DPS) is expected to increase by 1% on a FY 2024 pro forma basis. CLAS’ aggregate leverage is also expected to improve from 39.6% as at 30 June 2025 to 37.8%, while debt headroom is expected to rise from about S$1.8 billion as at 30 June 2025 to about S$2.0 billion on a pro forma basis.

Ms Serena Teo, Chief Executive Officer of CapitaLand Ascott Trust Management Limited and CapitaLand Ascott Business Trust Management Pte. Ltd. (the Managers of CLAS), said: “After evaluating the property’s age, substantial capital expenditure required and the potential income loss during renovation, we are proposing to divest Citadines Central Shinjuku Tokyo at this opportune time. It will enhance our financial flexibility to further optimise our portfolio. Post-divestment, Japan is expected to contribute about 16% to CLAS’ gross profit^[5]. We continue to seek more yield-accretive investment opportunities in the country to deliver long-term value to our Stapled Securityholders.”

“Japan remains a key market for CLAS. The country’s rising pace of urban migration and limited supply of prime housing options bode well for our rental housing assets, strengthening our resilient income base. In 1H 2025, CLAS’ rental housing portfolio continued to generate stable income with an average occupancy rate of over 95%. Japan also continues to enjoy strong international travel demand, boosting the performance of our hospitality assets such as serviced residences and hotels,” added Ms Teo.

In 1H 2025, Japan was one of CLAS’ strongest performing markets, with both revenue and gross profit from its Japan properties increasing 12% year-on-year (y-o-y) respectively. On a same-store basis^[6], revenue and gross profit of CLAS’ Japan portfolio increased 7% and 9% y-o-y respectively. Post-divestment, CLAS will have 29 assets in the country, comprising one serviced residence, four hotels, 23 rental housing properties and a student accommodation property.

Proven track record of recycling capital towards more optimal uses to strengthen portfolio
CLAS has a strong track record of divesting assets at a premium to book value and redeploying capital towards more optimal uses. As part of its portfolio reconstitution strategy, CLAS has completed nine divestments totalling over S$500 million at up to 55% premium to book value since 2024. CLAS has invested about S$530 million in five yield-accretive acquisitions^[7] over the same period.

Divestment proceeds have also been utilised to fund AEIs to uplift asset value and profitability. From 2024 to 1H 2025, CLAS completed AEIs for seven properties^[8] located in gateway cities such as Berlin, Dublin, London, Paris, Seoul and Singapore.

CLAS has AEIs planned for four remaining properties, namely, Citadines République Paris in France, The Cavendish London in the United Kingdom, Sydney Central Hotel in Australia and Sotetsu Grand Fresa Osaka-Namba in Japan. The total capital expenditure for these four AEIs is approximately S$205 million, of which CLAS will invest approximately S$145 million. The remaining amount will be funded by the master lessee or operator of the properties. These AEIs are slated for completion in 2026^[9].

About Citadines Central Shinjuku Tokyo
Citadines Central Shinjuku Tokyo is situated in Kabukicho, Shinjuku’s main entertainment area. Completed in 2008, the 206-unit property is surrounded by a plethora of retail, dining and lifestyle options. JR Shinjuku Station is less than a 10-minute walk away, offering convenient access to the rest of the city via the metro, to other parts of Japan via the regional train network, and to Narita International Airport.

NOTES:

[1] Based on exchange rate of JPY1 to S$0.008908 unless stated otherwise.
[2] As at 30 June 2025.
[3] As at 10 July 2025.
[4] Based on the property’s FY 2024 EBITDA.
[5] Based on CLAS’ 1H 2025 gross profit.
[6] Excluding acquisitions and divestments between 1H 2024 and 1H 2025.
[7] Teriha Ocean Stage, ibis Styles Tokyo Ginza and Chisun Budget Kanazawa Ekimae in Japan, remaining 10% stake in Standard at Columbia in the United States of America and lyf Funan Singapore.
[8] The Robertson House by The Crest Collection in Singapore, Citadines Les Halles Paris, Citadines Kurfürstendamm Berlin, La Clef Tour Eiffel Paris, Citadines Holborn-Covent Garden London, Temple Bar Hotel Dublin by The Unlimited Collection and ibis Ambassador Seoul Insadong.
[9] Timelines of the AEIs are subject to change. AEI schedules may be adjusted as appropriate in view of macroeconomic and market conditions.