SINGAPORE - CapitaLand Investment (CLI) has set up a lodging private fund with a target equity size of US$600 million (S$810.9 million), it said on Feb 14.

The new fund, CapitaLand Ascott Residence Asia Fund II (Clara II), is the real estate investment manager’s second private fund focusing on serviced residence and co-living assets.

Clara II has obtained equity commitment from global institutional investors in Europe and Asia-Pacific. CLI will hold a 20 per cent sponsor stake in the fund, and the remaining 80 per cent will go to third-party institutional investors.

“We are in a strong financial position to seize good investment opportunities and inject quality assets into our private funds,” said Mr Kevin Goh, chief executive for CLI Lodging and Ascott.

He said Clara II will leverage Ascott’s global operational expertise, as well as sales and marketing network. There is also potential to establish more lodging private funds in regions like Europe.

Two lyf-branded properties in Singapore and Japan will be added to the fund as its seed assets. Clara II will acquire a 50 per cent stake in lyf Bugis Singapore, which has 308 units, and a full stake in lyf Shibuya Tokyo, which has 200 units.

Both properties are freehold, with plans for green certification, CLI said.

It plans to launch lyf Bugis Singapore in mid-2024. Meanwhile, lyf Shibuya Tokyo will open in the fourth quarter of 2024.

CLI managing director for lodging private equity funds Mak Hoe Kit said investor interest in serviced residences and co-living properties has been on the rise as these assets have proven to be resilient even during Covid-19.

“These properties generate stable income from long-stay guests and have the flexibility to take in guests on short stays to maximise revenue,” he said.

In 2015, Ascott set up the US$600 million Ascott Serviced Residence Global Fund through a 50-50 joint venture with the Qatar Investment Authority.

CLI shares closed two cents, or 0.7 per cent, lower at $2.83 on Feb 14. THE BUSINESS TIMES