SINGAPORE (Jan 30): By a stroke of good fortune, coincidence or foresight, Ascott Residence Trust (ART) signed an agreement to divest of Citadines Xinghai Suzhou and Citadines Zhuankou Wuhan at a price more than 30% above their combined property book values representing net gains of $21.2 million, at an exit capitalisation rate of 3.7%. The sales and purchase agreement was signed in Dec 2019 and completes in 1HFY2020.

“We do not expect the buyers to walk away. We’ve received RMB80 million out of RMB500 million. These properties are older with shorter leases periods [for the land] and would have needed significant capital expenditure for improvement and we do not see upside from there,” says Beh Siew Kim, CEO of ART’s manager.

“In Jan this year we signed a sales and purchase agreement to acquire a property in Sydney at an entry yield of 5%. This is a master lease property, with a more stable income component. We are divesting the properties in China at 3.7% and reinvesting into Australia at 5%. This is an accretive investment from our perspective,” she explains. On Jan 30 ART announced its planned acquisition of Quest Macquarie Park Sydney (picture above), a 111-room freehold property for A$46 million.

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