CapitaLand Ascott Trust (CLAS) plans to acquire three lodging assets, based in the UK, Ireland, and Indonesia, at a cost of S$530.8 million ($396 million).

In a statement on Wednesday, CLAS said it has signed a Memorandum of Understanding (MoU) with its sponsor, The Ascott Limited (Ascott), for the proposed acquisition of the three assets—The Cavendish London; Temple Bar Hotel, Dublin; and Ascott Kuningan Jakarta.

Furthermore, the firm intends to raise at least S$300 million ($224 million) via an equity fundraising, to partially fund the proposed acquisitions, CLAS said in a separate statement. 

Approximately S$170 million (approximately 56.7%) of the gross proceeds from the equity fundraising will be used to partially fund the proposed acquisitions.

The acquisition will enable CLAS to enhance its income streams and capitalise on travel recovery and robust lodging demand.

Upon completion of the proposed acquisition, CLAS is expected to increase its total distribution by S$13.5 million and its dividend per share (DPS) by 1.8% on an FY2022 pro forma basis. The earnings before interest, taxes, depreciation and amortisation (EBITDA) yield of the proposed acquisition is 6.2% on an FY2022 pro forma basis.

The Cavendish London presents a value-add opportunity for CLAS. The property will be renovated and rebranded under The Crest Collection brand, a luxury collection brand managed by Ascott. The property’s valuation is expected to be 316 million pounds (approximately S$547.2 million) following the renovation and stabilisation of the property in 2027.

The market revenue per available unit (RevPAU) in London, Dublin and Jakarta has exceeded pre-pandemic levels of 2019.

With the acquisition of the three lodging assets, CLAS’ proportion of green-certified properties (by gross floor area) in its global portfolio is also expected to increase to approximately 39%, bringing it closer to its target of 50% by 2025.