CapitaLand Ascott Trust’s successful divestment of Citadines Mount Sophia in Singapore for S$148 million

Friday, February 2, 2024

CapitaLand Ascott Trust (CLAS) has initiated the divestment of Citadines Mount Sophia Singapore to an unrelated third party, fetching a substantial S$148 million, reflecting a noteworthy 19.4% premium over its book value. Anticipated net proceeds from this divestment are estimated to reach approximately S$138.6 million, with an exit yield of around 3.2%. This strategic move is expected to result in a net gain of about S$14.6 million for CLAS, with the transaction anticipated to conclude in the first quarter of 2024.

Ms. Serena Teo, the Chief Executive Officer of CapitaLand Ascott Trust Management Limited and CapitaLand Ascott Business Trust Management Pte. Ltd. (the Managers of CLAS), stated, “We are divesting Citadines Mount Sophia Singapore at close to S$1 million per key, representing a significant premium to book value. With the inclusion of Citadines Mount Sophia Singapore, CLAS has announced divestments totaling S$408.1 million in assets over the last eight months, all at premiums to book value. The divestment of 10 mature assets is expected to unlock gains amounting to S$38.9 million, boasting an average exit yield of about 3.8%. The capital generated from these divestments will be utilized to reduce debt, support asset enhancement initiatives (AEI), or be reinvested in higher-yielding opportunities, thereby augmenting returns within our portfolio. This move is projected to enhance CLAS’s financial flexibility, potentially reducing our gearing by close to 2 percentage points.”

She continued, “The divestment aligns with our active portfolio reconstitution strategy. CLAS has recently completed the acquisition of four assets[6], securing higher entry yields. We remain poised to expand our portfolio opportunistically, focusing on acquiring yield-accretive assets. Over the past three years, income derived from our investments has more than compensated for the distribution income from divested properties. Additionally, CLAS has eight properties[7] currently undergoing or scheduled for AEI. Through our proactive portfolio reconstitution efforts and AEI plans, we are committed to fortifying our portfolio, delivering enduring value to our Stapled Securityholders.”

In tandem with the divestment of Citadines Mount Sophia Singapore, CLAS has also successfully concluded the divestment of Courtyard by Marriott Sydney-North Ryde on January 31, 2024. This represents one of two mature hotels in CLAS’ divestment pipeline in Australia[8], with the divestment of the other property, Novotel Sydney Parramatta, anticipated to be finalized in the third quarter of 2024.

Highlighting Singapore as a key market for CLAS, the post-divestment portfolio will consist of four lodging properties in the country. Presently, CLAS manages three operational properties – Ascott Orchard Singapore, lyf one-north Singapore, and The Robertson House by The Crest Collection. Furthermore, the development of a 192-unit Somerset serviced residence at the popular Clarke Quay precinct is progressing as planned, with completion expected in the second half of 2025.

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