CapitaLand Investment (CLI) has established its new lodging private fund, CapitaLand Ascott Residence Asia Fund II (CLARA II) to invest in serviced residences and coliving properties in gateway cities in key developed Asia Pacific (APAC) markets.

 

The fund, which has a target equity size of US$600 million ($800 million), comes amid growing demand for lodging, according to CLI. CLARA II is CLI&rsquo s second private fund that focuses on serviced residence and coliving assets. It is the follow-on fund to the US$600 million Ascott Serviced Residence Global Fund (ASRGF).

 

In line with its asset-light strategy to grow its funds under management (FUM), CLI will have a 20% stake in CLARA II. The remaining 80% will be held by third-party institutional investors.

 

CLARA II will leverage the global operating expertise of CLI&rsquo s lodging business, The Ascott Limited, to manage its portfolio of resilient and green-certified lodging assets.

 

The new fund has already secured its first close with equity commitment by global institutional investors from Europe and Asia, and the fund will acquire two seed assets, a 50% stake in the 308-unit lyf Bugis Singapore and a 100% stake in the 200-unit lyf Shibuya Tokyo. Both properties are freehold and are well-positioned to capture the strong demand from business and leisure travellers. They are also set to be green-certified. lyf Bugis Singapore will be unveiled in mid-2024 while lyf Shibuya Tokyo will open in 4Q2024.

 

&ldquo Combining CLI&rsquo s investment management capabilities and Ascott&rsquo s expertise in operating lodging properties worldwide under our award-winning brands, we are well-positioned to support the growth of our private funds. We are in a strong financial position to seize good investment opportunities and inject quality assets into our private funds,&rdquo says Kevin Goh, CEO for CLI Lodging and Ascott.

 

&ldquo Tapping on travellers' preference for trusted brands, CLARA II will leverage Ascott&rsquo s global operational expertise, and sales and marketing network. This enables us to enhance the value of the assets and deliver sustainable returns to investors. Investors will further benefit from the strong demand for lodging as international travel continues its upward trajectory. Besides Asia Pacific, we see the potential to establish more lodging private funds in other regions such as Europe,&rdquo he adds.

 

&ldquo Investors&rsquo interest in serviced residences and coliving properties have increased as these assets have proven to be resilient even during the Covid-19 pandemic. These properties generate stable income from long-stay guests and have the flexibility to take in guests on short stay to maximise revenue,&rdquo says Mak Hoe Kit, managing director, lodging private equity funds at CLI.

 

&ldquo With trends such as increased global mobility, coliving becoming mainstream and travellers spending more time overseas, the sector is strategically positioned to offer attractive returns. CLARA II will target markets that have strong economic fundamentals and transparent regulations. We see good investment and value-add opportunities in these key developed APAC markets,&rdquo he adds.

 

CapitaLand India Trust (CLINT) has entered into a forward purchase agreement with Casa Grande Group to acquire three industrial facilities at OneHub Chennai, India for an estimated INR2.68 billion   ($43.2 million).

 

The facilities represent a total net leasable area of 0.79 million sq ft. The transaction purchase price includes CLINT&rsquo s partial funding for the lease of the project as well as full funding for the development.    

 

CLINT will provide funding in three phases, subsequently acquiring the facilities upon completion of the construction of each phase &mdash subject to a stabilisation period of six months for leasing. The acquisition of Phase 1 is expected to be completed by the first half of 2025. 

 

The transaction follows CLINT&rsquo s earlier forward purchase transactions with Casa Grande Group for three industrial facilities at Mahindra World City, Chennai. 

 

With the proposed acquisition, the floor area of CLINT&rsquo s industrial, logistics and data centre asset classes as a percentage of its committed pipeline will increase approximately from 12% to 14%. CLINT&rsquo s total floor area under its committed pipeline will also increase by 2.6% from 30.1 million sq ft to 30.9 million sq ft.

 

CapitaLand India Trust Management CEO Sanjeev Dasgupta says the acquisition will further diversify CLINT&rsquo s portfolio and grow its industrial presence in Chennai, which is developing into an important hub for electronics component manufacturers in South India.

 

&ldquo It will also enable us to offer our tenants high-quality facilities at OneHub Chennai, an established industrial township with plug and play infrastructure. With our forward purchase agreements, we have a pipeline of industrial assets at strategic locations, allowing us to capitalise on the growing demand from global companies looking to set up industrial facilities in India,&rdquo he adds.

 

CapitaLand Investment will retain a 5 per cent interest in Capital Square Beijing, while providing asset management services for the joint venture. 

SINGAPORE - CapitaLand Investment (CLI) is divesting a 95 per cent stake in Capital Square Beijing to AIA Life Insurance through a 2.4 billion yuan (S$447 million) joint venture set up with the Hong Kong-based insurance group.

 

Under the partnership, CLI will retain a 5 per cent interest in Capital Square Beijing, while providing asset management services for the joint venture.

 

This is expected to contribute to CLI&rsquo s recurring fee income, said the real estate investment manager on Jan 31.

 

Puah Tze Shyang, CLI&rsquo s chief executive for China, noted that the transaction marks the second time CLI has partnered AIA in China. AIA had invested in one of its yuan-denominated funds in 2022.

 

&ldquo We remain focused on being asset light and capital efficient, while continuing to scale up our fund management business,&rdquo he added.

 

Capital Square Beijing is a Grade A office building located in Beijing&rsquo s Chaoyang District, with a total above-ground gross floor area of 44,759 square metres.

 

It was acquired by CLI in October 2022 through a court auction. Subsequently, it underwent an asset enhancement initiative to upgrade the building&rsquo s facilities, revitalise its tenant mix and improve its operational efficiencies.

THE Ascott Limited, CapitaLand Investment : 9CI +0.34%&rsquo s (CLI) lodging business unit, sees strong potential coming from Japan, a market poised for further growth post-pandemic.

 

Ascott has some 2,900 units in 22 operating properties spanning five cities in Japan. This is more than double the size of its previous portfolio of Japanese properties, before its acquisition of serviced apartment provider Oakwood Worldwide from Mapletree Investments in the second half of 2022.

 

Today, around 80 per cent of Ascott&rsquo s properties are in the Asia-Pacific region, and the company is a &ldquo big contributor&rdquo to CLI&rsquo s fee-based income, Beh Siew Kim, CLI&rsquo s chief financial and sustainability officer for lodging, told the press on Thursday (Jan 18). 

 

Growth is especially evident in Japan, noted Beh, who is also the investment and managing director for Japan and Korea at Ascott.

 

Christian Baudat, Ascott country general manager for Japan, said outbound travel to Japan is also one of the lodging business&rsquo largest source markets, especially from markets such as China, Thailand and Vietnam. &ldquo This has been consistently so even before the pandemic.&rdquo  

 

Beh attributed much of Ascott&rsquo s growth in Japan to the company&rsquo s asset-light strategy, focusing on managing quality hospitality assets for third-party owners rather than owning the property. &ldquo (In doing so), you don&rsquo t actually put in any capital at all,&rdquo she said.

 

Today, 80 per cent of Ascott&rsquo s properties are owned by third parties, being under management and franchise contracts, up from 43 per cent a decade ago.

 

Average daily rates (ADR) in Japan are also one of the highest in Asia, thanks in part to high demand for accommodation, said Baudat.

 

There are also increased utility costs and growing inflationary pressures, which need to be taken into consideration when rooms are priced, he noted. 

 

Ascott&rsquo s Japan ADR have risen with the company&rsquo s Oakwood acquisition, said Beh. Rates rose 9 per cent between 2019 and 2023, while revenue surged by 72 per cent. Revenue from short stays specifically increased by 43 per cent in the same period.

 

After all remaining travel restrictions were lifted in Q4 2022, Ascott&rsquo s revenue per available unit for its Japanese properties skyrocketed by 146 per cent year on year.

 

Meanwhile, the average occupancy of its Japan properties last year was 80 per cent &ndash close to pre-pandemic levels of 81 per cent.

 

Based on estimates by the Japan National Tourism Organization released on Wednesday, the country welcomed 25.1 million tourists last year &ndash around 79 per cent of pre-pandemic levels. December 2023 also marked the seventh straight month in which there were more than two million foreign visitors.  

 

Japanese travel agency JTB Corp predicted that the country will see a record high of 33.1 million visitors this year with the return of more mainland Chinese tourists. 

 

Even with the open borders, Baudat noted that some Japanese are opting to remain in the country due to the weaker yen. Domestic tourists make up 20 per cent of guests across Ascott&rsquo s properties in Japan on average, and up to 70 per cent for some properties, such as the 175-room Oakwood Suites Yokohama, he said. 

 

With ADR for shorter stays higher than long stays, short stays accounted for about 65 per cent of Ascott&rsquo s revenue in Japan last year, even though long stays made for 60 per cent of room nights, said Baudat.

 

Beh said that is why Ascott is looking to offer more short-stay accommodations across its portfolio of properties under a &ldquo flex-hybrid hotel-in-residence&rdquo model. The model allows guests to stay for varying lengths at serviced apartments with the facilities and amenities of a hotel. 

 

Still, long-stay accommodations provide base income. &ldquo The ultimate aim is to give owners the best returns and confidence that (their) base income is protected,&rdquo she said.

 

Ascott will be keeping its eyes peeled for new opportunities &ndash for example, in the western city of Osaka, where the country&rsquo s first casino will be built along with a conference centre and other facilities. The integrated resort is scheduled to open in 2029 and is expected to attract domestic and international tourist spending. 

 

Ascott&rsquo s parent CLI will continue investing in Japan. &ldquo Japan is one of the most investable markets right now for real estate investments,&rdquo said Beh, citing the country&rsquo s immense popularity as a travel destination and rebound in tourism.  

 

Beyond Japan, Beh said Ascott is looking to expand its footprint in the United States, where the lodging business has 16 properties and more than 6,200 units.

 

The company will also continue pursuing both organic and inorganic growth opportunities, for instance by broadening into more asset classes or through mergers and acquisitions, she said. &ldquo Historically, we acquire companies that are mid-sized (with) 5,000 or up to 15,000 units. They can&rsquo t really scale up anymore, or maybe they are looking for an exit opportunity.&rdquo

 

Another avenue for organic growth is in franchise management, which Ascott intends to expand, said Beh. This will enable others to use its brands or leverage its extensive network for a fee. The exact framework is being set up but it covers selected brands for now, and will hopefully expand to cover all of Ascott&rsquo s brands eventually, she said.

 

Since its inception in 1984, Ascott has grown from a single serviced residence along Scotts Road in Singapore to having more than 940 properties yielding over 162,000 units in more than 40 countries. These include serviced residences, co-living properties, hotels and independent senior living apartments.

 

THE Ascott Limited, CapitaLand Investment : 9CI +0.68%&rsquo s (CLI) lodging business unit, has secured over 3,000 units across more than 20 properties under its Oakwood portfolio of brands since the second half of 2022.

 

This represents more than 20 per cent growth for Ascott&rsquo s Oakwood portfolio, since its acquisition from Mapletree Investments in H2 2022, said the company on Thursday (Jan 18). 

 

This also makes the Oakwood portfolio &ndash which includes brands such as Oakwood and The Unlimited Collection, as well as other unbranded properties &ndash one of Ascott&rsquo s fastest growing global brands in 2023, the company said. 

 

With these signings, Oakwood will have almost 18,000 units across 48 cities. This includes new markets in South Korea, Indonesia, Malaysia and Vietnam.

 

Kevin Goh, chief executive for Ascott and CLI lodging, said the &ldquo smooth integration&rdquo of the Oakwood portfolio into the company&rsquo s operational framework has helped to drive revenue and optimised cost synergies. For instance, properties won over from other operators in Jakarta and Manila were converted and made operational within months of their signings last year. 

 

&ldquo With more operationally ready properties coming onstream at a faster pace, we are seeing an immediate contribution of the Oakwood portfolio to Ascott&rsquo s recurring fee income, which is in line with our aim to double fee earnings to more than S$500 million by 2028,&rdquo he said. 

 

A fresh breath of life

The new signings are part of Ascott&rsquo s efforts to refresh the Oakwood brand, which was previously known for its serviced apartments for corporate travellers. Beyond serviced apartments, the brand refresh will see Oakwood offer more city hotels and full-service resorts, said the company.

 

The villa resort Oakwood Ha Long was opened earlier this year and another two similar properties will open in Bali and Chongli in the first half of 2024, said Ascott. 

 

Tan Bee Leng, the lodging operator&rsquo s managing director for brand and marketing, said: &ldquo With the rise of telecommuting and flexible schedules, business travellers increasingly view work trips as opportunities to extend their stays for leisure purposes.&rdquo

 

&ldquo Our refreshed Oakwood brand aims to address this growing market of business professionals who increasingly value holistic travel experiences,&rdquo she added. 

 

Goh added that Ascott will continue pursuing &ldquo transformative deals&rdquo to accelerate its expansion while providing immediate access to new markets, diverse customer bases and valuable synergies. 

 

&ldquo Coupled with our continued focus on organic signings of management and franchise contracts, we not only intend to keep pace with industry trends but to break new grounds and stay ahead, positioning Ascott as a global leader in hospitality,&rdquo Goh said. 

 

The Oakwood brand refresh follows the refresh of sister brands Ascott, Citadines, The Crest Collection and Somerset in the past two years.