CapitaLand Investment Limited (CLI) has established a new lodging private fund, CapitaLand Ascott Residence Asia Fund II (CLARA II), valued with a target equity size of US$600 million which will invested in serviced residences and co-living properties in Asian gateway cities.
CLARA II is the follow-on fund to the US$600 million Ascott Serviced Residence Global Fund (ASRGF). The latter’s latest property, lyf Ginza Tokyo was opened in November 2023 and has since exceeded its average target rent.
CLI will hold a 20 per cent sponsor stake in CLARA II in line with its asset-light strategy to grow its funds under management while keeping strong alignment with its investors and partners. The remaining 80 per cent will be held by third-party institutional investors.
The new fund has secured its first close with equity commitment by global institutional investors from Europe and Asia, and will acquire two seed assets – 308-unit lyf Bugis Singapore with a 50 per cent stake, and set for a mid-2024 opening; and 200-unit lyf Shibuya Tokyo, Japan with a 100 per cent stake, scheduled to open in 4Q2024.
The two freehold properties are strategically located within their respective city centres and are well-positioned to capture the strong demand from business and leisure travellers. Both properties are also set to be green-certified.
Kevin Goh, CEO for CLI Lodging and Ascott, said: “Combining CLI’s investment management capabilities and Ascott’s expertise in operating lodging properties worldwide under our award-winning brands, we are well-positioned to support the growth of our private funds.
“We are in a strong financial position to seize good investment opportunities and inject quality assets into our private funds. Tapping on travellers’ preference for trusted brands, CLARA II will leverage Ascott’s global operational expertise, and sales and marketing network. This enables us to enhance the value of the assets and deliver sustainable returns to investors. Investors will further benefit from the strong demand for lodging as international travel continues its upward trajectory.”
Goh added that there is potential to establish more lodging private funds in other regions such as Europe.
Mak Hoe Kit, managing director for lodging private equity funds at CLI, said serviced residences and co-living properties have proven to be resilient even during the pandemic.
“These properties generate stable income from long-stay guests and have the flexibility to take in guests on short stay to maximise revenue. With trends such as increased global mobility, co-living becoming mainstream, and travellers spending more time overseas, the sector is strategically positioned to offer attractive returns,” remarked Mak, who added that CLARA II will target markets with strong economic fundamentals and transparent regulations.
