Ascendas Hospitality Trust said on Wednesday that it agreed to acquire the Ibis Ambassador Seoul Insadong hotel for 77.5 billion won, or around S$94.5 million, from the Korean Teachers’ Credit Union and KT&G.
The acquisition price, which was at a 3.1 percent discount to the hotel’s latest valuation, offers a pro forma net property income yield of 4.6 percent, the trust’s manager said in a filing to SGX after the market close on Wednesday. The trust plans to fund the purchase with debt, the filing said.
Tan Juay hiang, CEO of the REIT manager, said the hotel, which caters to both business and leisure travelers, was located near a major business district as well as leisure attractions.
“We are confident that the operator’s deep knowledge of the local market and access to AccorHotels’ extensive loyalty program will drive the performance of the Hotel. In addition, the master lease with a minimum rent also provides further income stability to A-HTRUST,” he said.
The AccorHotels loyalty program has 41 million members, the filing said. It added that the acquisition would diversify the trust’s pool of hotel operators under master leases, which reduces counterparty-risk concentration.
The hotel is managed by Ambassador Hotel Group, which has a tie-up with AccorHotels, it said.
Tan also noted that Seoul’s hotel market has benefited from a strong recovery in inbound travel to the country, particularly from its top source market, China, amid marketing campaigns.
The hotel was completed in 2013 and major capital expenditure isn’t expected to be needed in the near term, it said. The property has 363 rooms as well as a restaurant, bar, two meeting rooms, a gym, a sauna and 24 carpark spaces, it said.
The acquisition is expected to be completed by the end of December, it said.
Ascendas Hospitality Trust’s first acquisition in Seoul, the Splaisir Seoul Dongdaemun, in May 2018.
Including the Ibis Ambassador Seoul Insadong and the Osaka portfolio acquisition, the trust has a portfolio of 14 hotels, it said.