This article first appeared in The Edge Financial Daily on August 15, 2018
KUALA LUMPUR: YTL Hospitality REIT is buying one of Japan’s most famous ski resorts, Niseko Village, in Hokkaido, Japan from its major unitholder YTL Corp Bhd for six billion yen (RM222.5 million) cash.
YTL REIT said the proposed acquisition is line with its investment objective to continuously 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 per unit.
The deal is deemed a related party transaction as YTL Corp is an indirect major shareholder of Pintar Projek Sdn Bhd — the manager of YTL REIT — by virtue of its major shareholdings in YTL Land Sdn Bhd, the holding company of the manager, and also a major unitholder of YTL REIT.
YTL Corp and Pintar Projek also share common directors in Tan Sri Dr Francis Yeoh Sock Ping, Datuk Yeoh Seok Kian, Datuk Mark Yeoh Seok Kah, Datuk Ahmad Fuaad Mohd Dahalan and Eu Peng Meng@Leslie Eu.
In a filing with Bursa Malaysia yesterday, YTL REIT said its wholly-owned subsidiary Starhill REIT Niseko GK has entered into a conditional sale and purchase agreement with YTL Corp’s indirect wholly-owned subsidiary Niseko Village KK on the proposed acquisition.
The property comprises a piece of freehold land measuring 10,728 sq m and a 200-room hotel known as “The Green Leaf Niseko Village”.
YTL REIT said the purchase consideration is expected to be funded by borrowings and/or internal funds.
“The purchase consideration is equivalent to the market value of the property of six billion yen as valued by Savills Japan Co Ltd in its valuation report dated July 16, 2018,” it added.
The net book value of the property stood at 666.31 billion yen as at June 30, 2017.
YTL had bought the ski resort from Citigroup Inc in March 2010 for six billion yen.
Upon completion of the proposed acquisition, Starhill REIT Niseko will lease the property to Niseko Village under a 30-year lease agreement, with an option to renew for a further 30 years.
YTL REIT said the lease arrangement will provide it with a steady and secure income stream and is expected to contribute positively to the trust’s future distributable income and distribution per unit.
It added that it intends to hold the property on a long-term basis, and will not sell the property unless it has reached a stage that offers only limited scope for growth.
On prospects of the property, YTL REIT said it is located in the famous Niseko resort area, which attracts numerous international skiers.
“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, some 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,” it added.
Barring any unforeseen circumstances and subject to all approvals being obtained, the proposals are expected to be completed by the end of the fourth quarter of 2018.
In Japan, YTL REIT already owns the Hilton Niseko Village also situated in Hokkaido. The trust currently has a total of 14 properties under its portfolio, of which three are in Australia, one in Japan and 10 in Malaysia. Among the group’s Malaysian properties are Majestic Hotel, JW Marriott Hotel, the Ritz-Carlton Hotel Wing and Suite Wing and the Vistana Hotel in Kuala Lumpur.