CDL Hospitality Trust makes maiden hotel acquisitions in Tokyo

The two hotels are worth $63.8m in total.

CDL Hospitality Trust has made its maiden hotel acquisitions in Tokyo, after it inked contracts to buy the 138-room Hotel MyStays Asakusabashi for $35.2m and the 116-room Hotel MyStays Kamata for $28.6m.

CDL HT has also acquired the operating companies for both hotels. According to OSK DMG, the acquisitions are fully debt-funded by yen-denominated debt, which will cause CDHT’s gearing to increase to 32.2% from 30.2%.

“The funding environment should be favourable with the low borrowing rates for JPY. The acquisition should thus be modestly yield-accretive to CDLHT, weighed against future forex risk. YTD, the JPY has depreciated 8% against the SGD, and is likely to continue weakening with further reforms via “Abenomics”. Nonetheless, for the first nine months of 2014, revenue per available room (RevPAR) for Tokyo hospitality grew by 9.3% compared to the same period last year, driven largely by room rate increases. Hotel occupancy levels remain high at 85.5%,” noted OSK DMG.