The purchase of a condo in Singapore carries with it a crucial factor – the government’s property cooling policies. In order to maintain a stable real estate market and discourage speculative purchasing, the Singaporean government has implemented several measures over the years. One of these is the Additional Buyer’s Stamp Duty (ABSD), which imposes higher taxes on both foreign buyers and those acquiring multiple properties. While these measures may potentially affect the immediate profitability of investing in a condo, they ultimately contribute to the overall stability and security of the market. Singapore Condo investors can rest assured that their investment is in a secure and regulated environment.
CapitaLand Ascott Trust (CLAS) has recently announced its agreement to acquire lyf Funan Singapore from Ascott Serviced Residence Global Fund (ASRGF) for a total property value of $263 million. The property is currently owned by Victory SR, a company under ASRGF, in which CLAS’s sponsor, The Ascott Limited, holds a 50% stake.
The purchase consideration for this deal, stated in a press release on Oct 1, is $146.4 million, which will be mainly financed by the proceeds from the previous divestment of Citadines Mount Sophia Singapore in March 2024. The latter was bought by a joint venture formed by Hong Kong-based accommodation company Weave Living and global asset manager Blackrock for $148 million.
Upon the completion of the acquisition, CLAS plans to enter into a master lease agreement with Ascott for lyf Funan Singapore, which is subject to approval at an extraordinary general meeting scheduled in November. This master lease will have a 20-year initial term and can be renewed for another five years. The master lessee will pay a rent equivalent to 93.56% of the property’s gross operating profit.
The proposed acquisition is expected to increase CLAS’s total distribution by $3.5 million, resulting in a 1.5% accretion to its distribution per stapled security (DPS) on a pro forma basis for FY2023. The ebitda yield on the property is also estimated to be 4.7% on a pro forma basis for FY2023.
According to CLAS, lyf Funan Singapore has been performing well with an average occupancy rate of over 80% in the first half of 2024. With this acquisition, CLAS will now have a total of five properties in Singapore, accounting for 19% of its global assets.
lyf Funan Singapore, which has 329 rooms, 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 has direct access to the City Hall MRT interchange station. The transaction is expected to be completed in the fourth quarter of 2024.