CapitaLand Establishes CLARA Fund II; Acquires Two lyf-Branded Properties as Seed Assets

Dark/Light Mode (14/02/24)  CapitaLand Investment Limited (CLI) has established a new lodging private fund, CapitaLand Ascott Residence Asia Fund II (CLARA II).

With a target equity size of US$600 million (SG$800 million, based on an exchange rate of US$1 to SG$1.333.), CLARA II will invest in serviced residences and coliving properties in gateway cities in key developed Asia Pacific markets.

CLARA II is CLI’s second private fund that focuses on serviced residence and coliving assets, following the US$600 million (S$800 million) Ascott Serviced Residence Global Fund (ASRGF).

CLI will hold a 20% sponsor stake in CLARA II in line with its asset-light strategy to grow funds under management while keeping strong alignment with investors and partners. The remaining 80% will be held by third-party institutional investors.

Social Kitchen at lyf Bugis Singapore

“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,” said Kevin Goh, Chief Executive Officer for CLI Lodging and Ascott. “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. Besides Asia Pacific, we see the potential to establish more lodging private funds in other regions such as Europe.”

CLARA II has secured its first close with equity commitment by global institutional investors from Europe and Asia, and the fund will acquire two seed assets.

The assets are a 50% stake in the 308-unit lyf Bugis Singapore - with the remaining 50% of lyf Bugis Singapore held under CLI’s CapitaLand Wellness Fund - and an 100% stake in the 200-unit lyf Shibuya Tokyo in Japan from Ascott.

The two freehold properties are both set to be green-certified, with lyf Bugis Singapore scheduled to be unveiled in mid-2024 while lyf Shibuya Tokyo will open in 4Q 2024.

“Investors’ interest in serviced residences and coliving properties have increased as these assets have proven to be resilient even during the Covid19 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, coliving becoming mainstream and travellers spending more time overseas, the sector is strategically positioned to offer attractive returns. CLARA II will target markets that have strong economic fundamentals and transparent regulations. We see good investment and value-add opportunities in these key developed Asia Pacific markets,” said Mak Hoe Kit, Managing Director, Lodging Private Equity Funds, CLI. “Through our first fund, ASRGF, we have demonstrated how we create value for our investors. Over 90% of ASRGF’s portfolio were sourced off-market or originated in-house, a testament to our strong global investment teams. After a successful rebrand and asset enhancement initiative, the divestment of our first property under ASRGF surpassed expected returns. ASRGF’s latest property, lyf Ginza Tokyo, opened in November 2023 and has since exceeded its average target rent. We remain committed as a trusted partner to deliver quality returns for our investors.”

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