CapitaLand Ascendas REIT divests local industrial building at 219% premium from 2005 purchase price

CLAR manager has decided to divest the KA Place property in Singapore at a 219% premium to its purchase price of $11.1 million in 2005. For a consideration of $35.38 million, HSBC Institutional Trust Services (Singapore) has entered into a sale and purchase agreement with KA Place SPV 1.The seven-storey high-specification industrial building offers 10,163 sq m in total gross floor area and a remaining land lease tenure of approximately 35 years. According to the manager, the divestment is in line with the REIT’s active asset management policy and is meant to improve its portfolio and optimise returns for unitholders.

If the divestment is completed on Jan 1, 2022, the pro-forma impact on the REIT’s net property income and distribution per unit would be a reduction of $0.92 million and 0.005 Singapore cents respectively. The net proceeds are estimated to be $30.65 million, which could be used to fund committed investments, debt repayments, loans to subsidiaries, or even distributed to unitholders.

The manager is entitled to a divestment fee of 0.5% of the sale consideration – to be paid in cash – in accordance with the trust deed dated Oct 9, 2002.

At the close of the trading session on April 20, units in CapitaLand Ascendas REIT had risen 1.05%, or by 3 cents, to $2.88. Once the proposed divestment is complete, CLAR will own 229 properties, spread across Singapore, Australia, US, UK and Europe.

Destruction of the KA Place property is meant to aid CLAR in reaching its goal, and with the net proceeds of the transaction, CLAR could obtain additional capital to finance numerous projects. After deployment, CLAR’s aggregate leverage will drop from 36.3% to roughly 36.2%. The proposed divestment is expected to finish during the second quarter of 2023.

Ultimately, the divestment of KA Place is an effective decision by the manager of CapitaLand Ascendas REIT to pursue its goal of improving the quality of its portfolio and maximising returns to unitholders.…

Ascott targets to double fee revenue to over $500 mil in next five years

The Ascott Limited, the lodging business unit of CapitaLand Investment, has set an ambitious target to double its fee revenue to over $500 million from its FY2022 base of $258 million in the next five years. This is its highest recorded earnings yet, bolstered by 36% year-on-year growth in FY 2022, a result of record-breaking property openings and signings.

The company has achieved its goal of securing 160,000 units by 2023. In 1QFY 2023, it signed up to 4,000 additional ones.

Ascott will continue to expand its portfolio offerings, ranging from serviced residence, hotel, co-living as well as senior living brand and positioning, while aiming for an annual net room growth rate of 8%-10% within the next five years. These plans, coupled with the company’s asset-light strategy, will lead to strengthening fee growth and drive the company to the fore.

According to Kevin Goh, CEO of CLI Lodging and Ascott, the company was able to double its units every five years, bringing the total to 160,000 by this year. Over 80% of the units are now under management and franchise contracts, up from 43% in 2008.

“With these management and franchise contracts, we want to achieve our new growth target and secure more prime properties that generate higher quality fees. Leveraging our brand equity and direct distribution channels will help us to deliver greater value to our property owners and customers.” Goh adds.

Oakwood Hotel & Apartments Taman Mini Jakarta, Indonesia (Photo: Ascott Ltd)
To reach its target, the company will focus on driving stronger fee growth in the next five years, with Citadines Connect City Centre hotel opening on Orchard Road, and two properties acquired in China and the Netherlands for $190 mil through its serviced residence global fund, Ascott also launching its third co-living property in Singapore.

It is clear that Ascott is in the right direction in fulfilling its goals, and will continue to strengthen its financial and customer portfolios in the coming years.…