CapitaLand Ascott Trust to sell Citadines Mount Sophia Singapore for S$148 million

CAPITALAND Ascott Trust : HMN 0% (Clas) is divesting Citadines Mount Sophia Singapore for S$148 million in a deal that is estimated to complete in the first quarter of 2024.

On Friday (Feb 2), its managers said the consideration is 19.4 per cent above the 154-unit serviced residence’s book value as at end-2023.

It also represents a divestment of “close to S$1 million per key, which is a significant premium to book value”, said the managers’ chief executive Serena Teo.

The transaction is expected to result in net proceeds of about S$138.6 million, as well as a net gain of some S$14.6 million.

Based on Clas’ FY2023 earnings before interest, taxes, depreciation and amortisation, the exit yield for Mount Sophia Citadines Singapore would stand at 3.2 per cent.

Teo said the sale of Citadines Mount Sophia Singapore brings Clas’ divested asset value over the last eight months to S$408.1 million across 10 mature assets. In turn, this is estimated to unlock S$38.9 million in gains, at an average exit yield of about 3.8 per cent.

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Clas’ managers intend to use capital from the sale of these 10 assets to reduce the group’s debt, fund asset-enhancement initiatives, or redeploy it into higher-yielding investments to increase the returns of its portfolio.

These divestments can offer Clas greater financial flexibility and potentially lower its gearing by close to two percentage points, said Teo.

Looking ahead, she said Clas seeks to “expand (its) portfolio opportunistically with more yield-accretive assets”.

“Over the past three years, distribution income gained from our investments has more than replaced the distribution income from the properties that were divested.”

Stapled securities of Clas were trading S$0.01 or 1 per cent higher at S$0.97 as at the midday trading break on Friday, after the news.

Citadines Mount Sophia Singapore is located at 8 Wilkie Road, a mixed-used development in Selegie.

While Clas’ managers only referred to the buyer of Citadines Mount Sophia Singapore as an “unrelated third party”, Hong Kong-headquartered rental accommodation brand Weave Living announced on the same day that it had acquired a property at the same address through a joint venture with asset manager BlackRock.

Weave Living’s founder and group chief executive Sachin Doshi said the property would “undergo an extensive year-long renovation”, and reopen under the company’s serviced-accommodation brand, Weave Suites, by early 2025.

The announcement confirms an earlier report by The Business Times (BT) that BlackRock and Weave Living were conducting due diligence for a potential acquisition of Citadines Mount Sophia. At the time, BT reported the property’s expected sale price to be around S$150 million.

Last month, a fund managed by Keppel acquired the office and retail components of Wilkie Edge for S$348 million.