CapitaLand Ascot Trust (CLAS) is selling a hotel in Singapore for S$148 million ($110 million). The Singapore-based company said it was divesting the Citadines Mount Sophia Singapore to an unrelated third party at 19.4% above book value.
Net proceeds of the sale are expected to total S$138.6 million ($103 million). The transaction will be completed by Q1 2024, CLAS said.
Weave Living has formed a joint venture with a BlackRock fund to acquire the hotel, according to a media report. This will be Weave’s second location in Singapore, the report added. The new owners will be carrying out a year-long renovation of the hotel before reopening in 2025 under the Weave Suites serviced accommodation brand.
The 154-room hotel has been divested at around S$1 million ($743.3 million) per key, which is a significant book value, said Serena Tao, CEO of CapitaLand Ascot Trust Management Ltd. and CapitaLand Ascott Business Trust Management Pte. Ltd.
“Including Citadines Mount Sophia Singapore, CLAS has announced divestments of S$408.1 million ($303 million) of assets at a premium to book value in the last eight months. The divestment of 10 mature assets will unlock S$38.9 million ($28.9 million) in gains, at an average exit yield of about 3.8%,” Teo said. “We aim to use the capital to reduce debt, fund our asset enhancement initiatives or redeploy it into higher-yielding investments to increase the returns of our portfolio. The divestments can offer CLAS greater financial flexibility, potentially lowering our gearing by close to 2 percentage points.”
The divestment is part of CLAS’ “active portfolio reconstitution strategy.” CLAS completed the acquisition of four properties in the past three months at a higher entry yield price and the company is planning to grow its portfolio with more yield-accretive properties.
CLAS has been divesting assets since last year as part of “portfolio reconstitution strategy.” In November 2023, CLAS sold two hotels in Sydney for $70.88 million and announced it will be selling three hotels in Japan to an unrelated third party for $75.2 million in December 2023.
In the last three years, distribution income gained from CLAS’ investments more than replaced the properties which were sold.
At present, CLAS has eight undergoing or set to undergo AEI.