CapitaLand Ascott Trust (CLAS) has entered into an agreement to divest Somerset Olympic Tower Tianjin in China to an unrelated third party.
Somerset Olympic Tower Tianjin, which comprises 185 units, is expected to be divested at above book value.
Serena Teo, CEO of the manager, says: “We continually reconstitute CLAS’s portfolio by divesting mature properties such as Somerset Olympic Tower Tianjin and redeploying the proceeds towards more optimal uses.”
She adds that CLAS’s properties in China have since contributed 1.4% to the group’s gross profit in 1HFY2024. The divestment of Somerset Olympic Tower Tianjin is expected to have minimal impact to CLAS’s gross profit.
The divestment comes on the back of CLAS’s portfolio reconstitution strategy. Prior to the divestment, CLAS had divested a total of approximately $400 million in assets year-to-date.
The group says the properties were divested at a premium to book value, which resulted in approximately $54 million in gains.
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On Oct 1, CLAS announced that proceeds from the divestment of Citadines Mount Sophia Singapore are set to go towards the proposed acquisition of lyf Funan Singapore at an ebitda yield of 4.7%. Citadines Mount Sophia Singapore was divested in March at an exit yield of 3.2%.
Additionally, CLAS also recently completed the asset enhancement initiative (AEI) for Citadines Holborn-Covent Garden London.
Since the beginning of the year, CLAS has completed AEIs for five of its properties, and has three properties in its AEI pipeline to be completed between 4QFY2024 and 2026.
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Upon completion, these initiatives are expected to “enhance the quality of CLAS’ portfolio and uplift its distribution income”, according to management.
Teo adds: “With CLAS’s strong financial position, we stand ready to capture opportunities to deliver accretive growth for our stapled security holders.”
Shares in CLAS closed 1 cent lower, or down 1.05%, at 94 cents on Oct 22.
