CLAR, the manager of CapitaLand Ascendas REIT (CLAR) has announced the divestment of Singapore industrial building KA Place for a consideration of $35.38 million. The sale and purchase agreement was entered by the REIT’s trustee, HSBC Institutional Trust Services (Singapore).

The consideration figure of $35.38 million represents a huge 219% premium to CLAR’s purchase price of $11.1 million in March 2005. It is also an impressive 55% premium to the property’s market valuation of $22.8 million as at Dec 31, 2022.

KA Place is a seven-storey high-specification industrial building with a carpark on the second storey. It is situated at 159 Kampong Ampat, and possesses a total gross floor area of 10,163 sq m and a remaining land lease tenure of about 35 years.

The manager of CLAR has decided that it is an opportune time to divest the property, as Marina Gardens Condo it fits into their proactive asset management strategy to improve the quality of their portfolio and optimise returns for unitholders.

Assuming the proposed divestment was completed on Jan 1, 2022, the pro-forma impact on CLAR’s net property income (NPI) and distribution per unit (DPU) for the financial year ended Dec 31, 2022 would have been a decrease of $0.92 million and 0.005 Singapore cents, respectively.

Net proceeds after divestment costs are expected to be $30.65 million. CLAR’s manager has said that the net proceeds may be deployed towards a variety of uses, including funding committed investments, repaying existing indebtedness, extending loans to subsidiaries, and making distributions to unitholders. If used to repay borrowings, CLAR’s aggregate leverage will be reduced from 36.3% to approximately 36.2%.

It is anticipated the proposed divestment will be concluded in 2Q2023. Upon completion, CLAR will own 229 properties across 4 territories – 96 in Singapore, 36 in Australia, 48 in the United States, and 49 in the United Kingdom and Europe.

The trust deed dated Oct 9, 2002 constituting CLAR also entitles the manager to a divestment fee of 0.5% of the sale consideration of the property, to be paid in cash.

Units in CapitaLand Ascendas REIT closed 3 cents higher, or 1.05% up, at $2.88 on April 20. This is likely an indication of investor reaction to the divestment announcement.…

Ascott Limited, the lodging business unit of CapitaLand Investment (CLI), is targeting to double its fee revenue to over $500 million in the next five years. This is off the back of its FY2022 base of $258 million – the highest earning on record so far. FY2022 saw an impressive 36% y-o-y growth, mainly due to record signings and property openings. Additionally, the business has also achieved its target of securing 160,000 units by 2023.

To further strengthen its product offerings and fee revenue, Ascott will be running its mid to luxury scaled serviced residence, hotel, co-living and senior living brands. A 8%-10% annual net room growth rate over the next five years is expected to bolster fee revenues. Kevin Goh, the CEO of both Ascott and CLI Lodging, is optimistic about the prospects of the business.

“With our asset-light strategy, Ascott has doubled in units every five years, growing from about 20,000 units in 2008 to over 160,000 units today,” says Goh. “We are now seeing the positive financial impact of growing our portfolio by eightfold and will focus on driving even stronger fee growth over the next five years.”

At the moment, more than 80% of the company’s total units are under management and franchise contracts, an increase compared to the 43% ten years ago. These management and franchise contracts usually generate recurrent fees and they tend to go on for long tenures. Goh has indicated that there are plans to secure more management and franchise contracts for prime properties with higher quality fees. Leveraging off the company’s strong brand equity and direct distribution channels are two other strategies to bring more value to property owners and customers.

Ascott has come a long way since its inception in the 1980s. Its exemplary record in managing its portfolio of properties cements its position as a leader in the global lodging industry. With its sights set on new heights, the business is set to bring better experiences to guests from across the world.…