Singapore-based Ascott Resident Trust (Ascott REIT) on Wednesday announced it has entered into an agreement to divest Ascott Raffles Place Singapore to an undisclosed third party for S$353.3 million ($260 million), according to a statement.
The sale is in line with Ascott REIT’s strategy to evaluate and rejuvenate its portfolio, it said, adding that the sale price is 64.3 per cent above the property’s latest valuation of S$215 million ($158.5 million) as at December 31, 2018.
According to Mingtiandi, the buyer of the 999-year leasehold asset is Singaporean property tycoon Cheong Sim Lam, who is also executive director and chief investment officer of Hong Kong-listed Associated International Hotels, and director of Hong Kong-listed Tian Teck Land. Cheong’s family is a significant investor in the city-state, said the report, having developed International Plaza and Hyatt Regency Singapore in downtown Singapore.
SGX-listed Ascott REIT acquired Ascott Raffles Place Singapore from The Ascott Limited for S$220 million ($162 million) in 2012. The 146-unit premier serviced residence is located in Singapore’s central business district, situated next to the Mass Rapid Transit station and is close to an array of dining and entertainment options.
Ascott REIT is expected to realise an estimated net gain of S$134 million ($98.8 million) from the transaction. The proceeds could be channelled into new investment opportunities that will offer better growth prospects for the REIT.
The transaction is expected to be completed in May 2019.
“The sale will give us the financial flexibility to recycle capital and invest in higher-yielding properties. We may also use the sale proceeds to pay down debt which will then increase our debt headroom for potential acquisitions of quality assets or to develop our own properties such as lyf one-north Singapore to enhance Ascott REIT’s portfolio,” said Ascott Residence Trust management Limited CEO Beh Siew Kim.
Managed by Ascott Residence Trust Management Limited, an indirect wholly owned subsidiary of property developer CapitaLand Limited, Ascott REIT’s other operational properties in Singapore are Ascott Orchard Singapore, Citadines Mount Sophia Singapore and Somerset Liang Court Singapore. lyf one-north Singapore is expected to open in 2021.