CapitaLand Ascott Trust (CLAS) is selling two hotels in Australia for a total of A$109m (€66m), which is about 5% above the book value.
CLAS did not disclose the identity of the purchaser of the Courtyard by Marriott Sydney-North Ryde and Novotel Sydney Paramatta properties, but it is reported that the buyer is an entity controlled by Chinese-owned Silversea Investments, an existing investor in Australian suburban hotels.
Serena Teo, CEO of CapitaLand Ascott Trust Management and CapitaLand Ascott Business Trust Management (the managers of SGX-listed CLAS), said the divestment was part of the trust’s active portfolio reconstitution strategy.
“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.”
She added: “The exit yield is also at an attractive level that compares favourably against the current cost of borrowing in Australia.”
Teo said the trust recently divested four mature serviced residences in regional France at an exit yield of about 4%. Part of the divestment proceeds would 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%.
“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,” added Teo.
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