SINGAPORE, 10 November 2023: CapitaLand Ascott Trust (CLAS) is divesting two hotels in Sydney, Australia, to an unrelated third party for AUD109.0 million (SGD95.6 million).
Situated outside of the city centre, the two properties are Courtyard by Marriott Sydney-North Ryde and Novotel Sydney Paramatta.
The two properties will be divested at about 5% above book value, and net proceeds of the divestment is expected to be AUD98.0 million (SGD85.9 million). The exit yield is 4.4%, and CLAS will recognise a net gain of AUD14.2 million (SGD12.4 million). The divestment of Courtyard by Marriott Sydney-North Ryde and Novotel Sydney Paramatta is expected to be completed by the first quarter of 2024 and the third quarter of 2024, respectively.
CapitaLand Ascott Trust Management Limited and CapitaLand Ascott Business Trust Management Pte Ltd chief executive officer Serena Teo said: “The divestment of these two properties outside of central Sydney is part of our active portfolio reconstitution strategy. CLAS remains focused on assets that offer better yields and will further uplift the value of our portfolio. As additional capital will be required to upgrade these two mature properties, the divestment will enable us to redeploy the proceeds into more optimal uses, such as but not limited to paying down debt and funding our other asset enhancement initiatives (AEI). The exit yield is also at an attractive level that compares favourably against Australia’s current cost of borrowing. We recently divested four mature serviced residences in regional France at an exit yield of about 4%. Part of the divestment proceeds will also be used to partially finance our acquisition of three prime lodging assets in London, Dublin and Jakarta at a higher yield of 6.2%, further enhancing our returns to Stapled Securityholders.
“Australia remains a key market for CLAS. We continue to see strong demand from corporate and leisure guests for our serviced residences and hotels in Australia, boosted by large-scale sporting events. Post-divestment, our remaining seven serviced residences and hotels under management contracts will enable us to capture the travel demand while our five serviced residences under master leases will continue to provide us with stable income,” Teo concluded.
