Ascott Residence Trust divests Ascott Raffles Place Singapore for around S$353 million

Singapore’s Raffles Place area with Ascott building; taken October 2018.Singapore’s Raffles Place area with Ascott building; taken October 2018.

Ascott Residence Trust entered a deal to sell serviced-residences property Ascott Raffles Place Singapore to an unrelated party for S$353.3 million, the REIT said in a filing to SGX after the market close on Wednesday.

The sale price was 64.3 percent above the property’s most recent valuation of S$215 million as of 31 December, with the REIT expected to realize a net gain of around S$134 million, it said.

The 146-unit property, located at 2 Finlayson Green in Singapore’s central business district, was acquired in 2012 for S$220 million from The Ascott Ltd, it said.

Proceeds from the transaction, which is expected to be completed in May, may be channeled into new investments with better growth prospects, the REIT said.

Beh Siew Kim, CEO of the REIT manager, Ascott Residence Trust Management, said the divestment would allow the REIT to recycle capital into 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,” she said in the statement.

Lyf one-north Singapore is a co-living development, which will offer 324 units amid at the millennial market and is expected to open in 2021.

Beh noted that Ascott Raffles Place Singapore accounted for only 3 percent of the REIT’s gross profit for the nine-months ended 30 September 2018, and the sale wasn’t expected to materially affect its financial performance.

Ascott Residence Trust’s other Singapore properties include Ascott Orchard Singapore, Citadines Mount Sophia Singapore and Somerset Liang Court Singapore, the filing said.

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