YTL Hospitality REIT acquiring Hokkaido ski resort for RM222.5m cash

PETALING JAYA: YTL Hospitality REIT (YTL REIT) is acquiring The Green Leaf Niseko Village for ¥6 billion cash (RM222.5 million) from Niseko Village KK (Niseko Village), an indirect wholly owned subsidiary of YTL Corp Bhd.
In a filing with Bursa Malaysia today, YTL REIT said its wholly owned subsidiary Starhill REIT Niseko GK (Starhill Niseko) has entered into a conditional sale and purchase agreement with Niseko Village.
YTL REIT said the acquisition is in line with its investment objective to continuously pursue the strategy to acquire and invest in high quality hospitality properties, with a view to provide long-term and sustainable income distribution to unitholders and achieve long-term growth in the net asset value per unit.
Upon completion of the acquisition, Starhill Niseko will lease the property to Niseko Village for 30 years with an option to renew for a further 30 years, at an annual rental rate of ¥315 million for the first five years with 5% rental increase every subsequent five years.
The lease arrangement will provide YTL REIT with a steady and secure income stream and is expected to contribute positively to the trust's future distributable income and distribution per unit.
The property comprises freehold land in Aza-Higashiyama, Niseko-cho, Abuta-gun in Hokkaido, Japan, measuring 2.65 acres on which the five-storey hotel is built. The
35-year-old hotel was substantially renovated, refurbished and reopened in December 2010.
Niseko-cho is a famous resort area that attracts international skiers. Last year, the 200-room hotel achieved an occupancy rate of 53.8%.
The property has a market value of ¥6 billion as at April 30, 2018 as ascribed by Savills Japan Co Ltd. Starhill Niseko expects to finance the purchase consideration and expenses related to the proposals with borrowings and/or internally generated funds.
As the proposed acquisition will be partly financed with borrowings, YTL REIT's gearing ratio is expected to increase from 37.5% to up to 40.2% based on the audited consolidated total assets value and borrowings of YTL REIT Group as at June 30.
The proposals, which will be completed by year-end, are not expected to have any material effect on YTL REIT's distribution policy of at least 90% of the distributable income for each financial year.
For the financial year ended June 30, 2018, YTL REIT declared an income distribution of 7.8683 sen per unit, representing 100% of the income available for distribution.
AmInvestment Bank Bhd has been appointed as the principal adviser for the proposals.