Singapore’s Ascott Residence Trust (Ascott Reit) has secured an $87.4 million loan on its S$218-million ($158 million) acquisition of the Sheraton Tribeca New York Hotel.
The USD loan carries an interest rate of 3-3.3 percent and the loan-to-value comes in around 55 percent. The REIT declined to name the lender.
The remaining S$98.5 million of the acquisition will be funded through Ascott Reit’s recent private placement, which will issue 94,787,000 new units to institutional and other investors at an estimated price of between S$1.055 per unit and S$1.085 per unit. Morgan Stanley is the placement agent and underwriter.
The 369-unit Sheraton Tribeca New York Hotel is located in the heart of Tribeca, one of the priciest residential neighborhoods in Manhattan. It maintained a 90 percent occupancy rate last year.
“With our second acquisition in New York, the United States of America will make up 10 percent of our asset size, and Asia Pacific and Europe will constitute 63 percent and 27 percent respectively, as we continue to maintain a balanced portfolio across the various geographies,” said Ronald Tay, the REIT’s CEO. “As the world’s financial capital and an international cultural destination, New York continues to draw millions of corporate and leisure travelers all-year round, making it one of the most resilient hospitality markets in the world.”
“Sheraton Tribeca New York Hotel has been achieving strong occupancy of more than 90% in the past year and average daily rate has been growing steadily since its opening in October 2010,” Tay added.
The accretive acquisition at an EBITDA yield of 6.8 percent is expected to increase Ascott Reit’s distribution income in FY 2015 by S$9 million.
Ascott Reit made it first US acquisition in a boutique hotel called Element New York Times Square West in the fourth quarter of 2015. Its asset size has quadrupled to S$4.7 billion since it was listed on the Singapore Exchange Securities Trading Limited (SGX-ST) in March 2006. It comprises 89 properties with 11,298 units in 38 cities across 14 countries.