Ascendas Hospitality Seeks Japan Hotel Acquisitions on Abenomics

Ascendas Hospitality Trust is seeking investments in Japan where Prime Minister Shinzo Abe’s efforts to revive the economy is boosting the prospects of its hotel industry, Chief Executive Officer Tan Juay Hiang said.

Ascendas Hospitality Trust, a Singapore-based business and property trust with one hotel in Japan among its portfolio of 10 hospitality assets, will focus its acquisitions in business centers like Tokyo, Osaka and Fukuoka, Tan said. The hotel industry will become “very attractive” as the yen’s decline against the dollar makes travel to Japan cheaper, he said.

The trust, which said it raised S$706.6 million ($564 million) in an initial public offering last year, is seeking to diversify its portfolio by adding assets in Japan where Abe’s government and the Bank of Japan have pledged to end 15 years of deflation and achieve a 2 percent inflation goal in two years. The trust also plans to expand its portfolio by adding hotels in Singapore, Hong Kong and South Korea, Tan said.

“Japan at this moment looks quite interesting as far as the macro is concerned with Abenomics pulling its way,” Tan said in an interview in the island state yesterday. “Japan is definitely looking more attractive. So clearly, that’s one destination.”

Tan said he’s focused on the election for the upper house of parliament next month to see if Abe can get a majority to push his policies through. Installed as prime minister after his Liberal Democratic Party won a landslide victory in the lower house of parliament in December, Abe faces a July election for the less powerful upper house.

‘Early Stages’

“If they can get a majority in parliament then the next three years politically should be pretty strong,” Tan said. “As the economy turns positive, we will see more deal flows popping up and transactions will get more intense, though we are still in the early stages.”

China, Australia and Japan will continue to be in Ascendas’s “radar chart,” while the trust plans to add three new countries, Tan said adding that the trust targets to have an equal weighting among the six countries.

“These six countries are politically quite stable, they are mature markets and growth is still there,” he said, adding that the company may eventually venture into emerging markets such as Indonesia, India, Vietnam, Thailand and the Philippines over the longer term.

Park Hotel

Ascendas Hospitality Trust is entering the Singapore hotel market by agreeing to buy the Park Hotel Clark Quay for S$300 million last month, adding to the trust’s portfolio of 10 hotels spread across Australia, China and Japan.

After the acquisition, Australian assets will decline to 54 percent of its holdings while Singapore will be about 24 percent, he said.

The Park Hotel Group is planning to sell additional hotels in Singapore including the Grand Park City Hall at Coleman Street and Grand Park Orchard, the Business Times reported in April, citing sources it didn’t identify.

“We will see if the price they want makes sense, then we would be keen to have a conversation with them,” Tan said referring to the report on the sale. “The process has just started from their end, so we will continue to evaluate.”

Hotel occupancy rates in Singapore averaged 86 percent in the past three years, as a record number of visitors were lured to new attractions such as two casino resorts and a S$1 billion downtown park, according to government data.

Ascendas Hospitality Trust declined 1.2 percent to 86 Singapore cents in Singapore trading yesterday, bringing its year-to-date decline to 8.3 percent and below its offer price of 88 cents a share. Its parent Ascendas Pte manages Singapore’s biggest industrial real estate investment trust, and operates in 33 cities with S$14 billion of assets, according to its website.

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