Ascott Residence Trust to sell Somerset Xu Hui Shanghai above book value
ASCOTT Residence Trust (ART) has agreed to sell Somerset Xu Hui Shanghai at an aggregate value of 1.05 billion yuan (S$215.6 million) to an unrelated third party.
Somerset Xu Hui Shanghai is a 32-storey serviced apartment building with a five-storey commercial podium and a basement car park. The property's agreed value is 171 per cent above its book value, said the managers in a pre-market filing on Tuesday.
ART is expecting to net a gain of 536.6 million yuan from the sale, which is slated to take place in Q2 2021. Estimated net proceeds of about 944.6 million yuan may be used to pare down the debts of ART, fund potential acquisitions or for other general corporate purposes, said the managers in its filing.
Due to the ongoing Covid-19 situation in China and strict government regulations to cool the country's property market, ART's managers said it sees limited operational growth prospects and capital appreciation upside to the property.
Somerset Xu Hui Shanghai's sale therefore presents an opportunity to unlock the asset's underlying value and redeploy the proceeds in higher yielding assets to enhance the returns of ART's portfolio, they added.
For illustration purposes, the trust would have booked a FY2020 distribution per stapled security (DPS) of 2.94 Singapore cents as opposed to 3.03 cents had the transaction completed on Jan 1, 2020.
A NEWSLETTER FOR YOU
Property Insights
Get an exclusive analysis of real estate and property news in Singapore and beyond.
Its net asset value (NAV) for the financial year would have been S$3.7 million rather than S$3.6 million, which translates to an FY2020 NAV per stapled security of S$1.18 instead of S$1.15.
In 2020, ART sold its Ascott Guangzhou in China and Citadines Didot Montparnasse Paris in France for a total of S$191.4 million.
The trust last reported a DPS of 1.99 Singapore cents for the half-year ended Dec 31, 2020, representing a 52 per cent decline from its DPS of 4.18 cents a year ago.
Stapled securities of ART closed S$0.02 or 2 per cent higher at S$1.02 on Tuesday.
BT is now on Telegram!
For daily updates on weekdays and specially selected content for the weekend. Subscribe to t.me/BizTimes
Reits & Property
Prime US Reit distributable income for Q1 2024 down 19.5% to US$11.9 million
Australia lending rules make banks go ‘too hard’ on due diligence: Westpac
Daiwa House Logistics Trust posts 0.6% higher Q1 distributable income
Manulife US Reit’s portfolio occupancy falls to 78.7% in Q1
FLCT posts 1.1% lower H1 DPU of S$0.0348 on higher vacancies, expenses
Aims Apac Reit posts 10.2% lower H2 DPU on enlarged unit base