YTL REIT to buy ski resort in Japan for RM222mil

PETALING JAYA: YTL hospitality real estate investment trust (REIT) has entered into a conditional sale and purchase agreement with Niseko Village KK for the acquisition of a ski resort hotel – The Green Leaf Niseko Village – for a cash consideration of six billion yen (RM222.5mil).

Niseko Village KK is an indirect wholly-owned subsidiary of YTL Corp Bhd.

According to a Bursa Malaysia filing, The Green Leaf Niseko Village comprises freehold land in Aza-Higashiyama, Niseko-cho, Abuta-gun, Hokkaido, Japan measuring 2.65 acres, hotel buildings, together with the structures, facilities or improvements, and operating assets.

“Upon completion of the proposed acquisition, YTL REIT will lease the property to Niseko Village KK under a lease agreement for a lease period of 30 years with an option granted to renew for a further term of 30 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 (DPU),” it said.

The proposed acquisition and proposed lease are deemed a related party transaction and a recurrent related party transaction respectively pursuant to the Main Market listing requirements of Bursa Malaysia.

YTL REIT said the proposed acquisition is line with the investment objective to continuously pursue the strategy to acquire and invest in high quality hospitality properties in Malaysia and internationally with a view to provide long-term and sustainable income distribution to unitholders and achieve long-term growth in the net asset value (NAV) per unit.

Meanwhile, the proposed lease is expected to contribute positively to YTL REIT’s future distributable income and DPU after taking into consideration, among others, the additional net property income received from the lease arrangement and estimated borrowing costs.

“The lease arrangement provides stable and secure cash flows with a step-up provision of 5% every five years.

“Risks associated with the hospitality and tourism industry which may result in reduced occupancy and uncertainty in cash flows are substantially mitigated through this lease arrangement,” YTL REIT added.

The property is located in Niseko-cho and the resort area attracts numerous international skiers.

In addition, the total number of nights stayed in Niseko-cho has dramatically increased over the past 14 years.

“Continued growth in international visitors will have a positive impact on the occupancy rate of the property, because, at present, approximately 70% (winter) and 50% (summer) of the property’s visitors come from overseas.

“As more and more international tourists are expected to visit Niseko-cho, large developments are accordingly planned in the near future.

“Therefore, it is expected that the subject area will maintain its reputation as a premiere resort area in Japan,” YTL REIT said.

YTL REIT closed unchanged at RM1.21, traded on a volume of 263,800 shares.