Transaction is part of CLAS’ active portfolio reconstitution strategy to deliver sustainable returns to Stapled Securityholders.
SINGAPORE – CapitaLand Ascott Trust (CLAS) has completed the divestment of four mature serviced residences in regional France to an unrelated third party for a total of 44.4 million euros (S$64.7 million1). The four properties are Citadines Croisette Cannes, Citadines Prado Chanot Marseille, Citadines Castellane Marseille and Citadines City Centre Lille.
The four properties were divested at 63% above book value2 and net proceeds of the divestment is approximately 34.1 million euros (S$49.7 million). The exit yield3 is about 4% and CLAS received a net gain of approximately EUR1.2 million (S$1.8 million).
Post-divestment, CLAS has 12 properties in France. The properties are predominantly located in Paris, including La Clef Tour Eiffel Paris and Citadines Les Halles Paris that are undergoing asset enhancement initiative (AEI) to uplift their value and profitability. AEI works include refurbishment of guest rooms and general public areas and both properties will remain open, receiving rent throughout the AEI.
Ms Serena Teo, Chief Executive Officer of CapitaLand Ascott Trust Management Limited and CapitaLand Ascott Business Trust Management Pte. Ltd. (the Managers of CLAS), said: “We have divested the four mature properties as part of our active portfolio reconstitution strategy to deliver sustainable returns to our Stapled Securityholders. As these properties have reached the optimal stage of their life cycles, the divestment enables CLAS to redeploy the proceeds to higher-yielding assets. Proceeds from the divestment will be used for our AEI in Europe. It will also be used to partially finance CLAS’ recent proposed acquisition of three prime lodging assets in the capital cities of London, Dublin and Jakarta.”
“Over the past three years, we have successfully divested properties at a premium to book value and invested the proceeds in higher-yielding assets, increasing our total distribution. With the recent proposed acquisition, we expect to further increase our total distribution by S$13.5 million and our Distribution per Stapled Security (DPS) by 1.8% on a FY 2022 pro forma basis4 upon completion of the acquisition. The EBITDA yield of the proposed acquisition is 6.2%5 on a FY 2022 pro forma basis, more than 2% higher than the exit yield from the divestment of the four properties in regional France. Post-renovation for The Cavendish London and Temple Bar Hotel as well as Milestone Payments for the acquisition, we expect to achieve an increased yield of 6.8%,” added Ms Teo.
In August 2023, CLAS signed a Memorandum of Understanding (MOU) with its sponsor, The Ascott Limited (Ascott), for a proposed accretive acquisition of three lodging assets – a hotel in London, The Cavendish London; a hotel in Dublin, Temple Bar Hotel; and a serviced residence in Jakarta, Ascott Kuningan Jakarta – at an agreed property value of S$530.8 million.
The proposed acquisition is part of CLAS’ ongoing efforts to enhance its portfolio through yield-accretive investments and AEIs. In FY 2022, CLAS invested S$420 million in 15 accretive acquisitions6, which contributed to the increase in CLAS’ DPS in 1H 2023. The new properties are largely longer-stay properties with average occupancy rates of over 95%, further enhancing CLAS’ stable income streams. In 1H 2023, CLAS’ DPS increased by 19% year-on-year to 2.78 cents.
- Based on an exchange rate of EUR1 to S$1.4568 unless stated otherwise.
- Based on the independent valuation dated 31 December 2022.
- Exit yield is computed based on FY 2022 Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA).
- Part of the payment of the purchase consideration in relation to The Cavendish London and Temple Bar Hotel will be made upon substantial completion of the renovations of each of the properties (Milestone Payment). The effects of the renovations and the costs of financing the Milestone Payment are not taken into account in determining the pro forma financial effects, as the Milestone Payment will be made only upon substantial completion of the respective property renovations.
- The EBITDA yield of 6.2% is based on the agreed property value of the properties excluding the Milestone Payment and before AEIs, if any. Including the Milestone Payment, the EBITDA yield is 5.1%.
- 14 of the 15 acquisitions were completed in FY 2022 and 2Q 2023. The turnkey acquisition of a rental housing property in Fukuoka, Japan, is expected to complete in 2024.
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