Ascott Residence Trust to sell Guangzhou, Paris properties above book value

Singapore

ASCOTT Residence Trust (ART) has entered into conditional agreements to sell Ascott Guangzhou in China and Citadines Didot Montparnasse Paris in France to two unrelated parties for S$191.4 million.

ART expects to realise total estimated net gains of S$23.2 million when both transactions are completed: S$19.4 million from the Guangzhou deal and S$3.8 million from the Paris deal, its managers said on Monday.

The Ascott Guangzhou serviced residence in China carries a divestment price of 780 million yuan (S$155 million), which is about 52 per cent above the property's book value and about 81 per cent higher than the acquisition price in 2012. This transaction is expected to complete in the first quarter of next year.

For the French serviced residence, the divestment price is 23.6 million euros (S$36.4 million). This is 69 per cent above the property's book value and 60.4 per cent higher than the acquisition price in 2010. This transaction is expected to be completed in the fourth quarter of this year.

These "opportunistic" sales at "attractive" prices will allow ART to rejuvenate its portfolio and unlock the properties' underlying value, said its manager's chief executive Beh Siew Kim, adding: "We will look out for opportunities to deploy the proceeds to other higher yielding assets for ART."

The proceeds may also be used to pare ART's debt, as distribution to stapled securityholders, or for general corporate purposes.

Ascott Guangzhou is a 207-unit serviced residence acquired from ART's sponsor The Ascott Limited (TAL) for 431 million yuan in 2012.

ART's managers said in a separate filing that additional capital expenditure would be required in the "near future" to maintain the property's performance and competitiveness.

"Given that the growth prospects of the property are limited due to changes in the operating environment, any capital expenditure at this time would not be prudent," they added.

Citadines Didot Montparnasse Paris was one of 28 properties ART acquired from TAL for S$1.39 billion in 2010. The 80-unit serviced residence has is located near open-air markets and the Georges-Brassens park.

Meanwhile, the stapled group's real estate investment trust also plans to sell its 100 per cent stake in the Chinese subsidiary that owns the Guangzhou serviced residence.

The existing management agreement with the Guangzhou property's manager, a wholly-owned subsidiary of TAL and a controlling stapled securityholder of ART, will be terminated.

Stapled securities of ART fell 1.5 Singapore cents or 1.6 per cent to end at 92 cents on Monday.