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CLAS divests Citadines Mount Sophia Singapore for $148 mil

Felicia Tan
·2-min read

The REIT will recognize net proceeds of around $138.6 million and a net gain of approximately $14.6 million.

CapitaLand Ascott Trust (CLAS) is divesting the 154-unit Citadines Mount Sophia Singapore to an unrelated third party for $148 million, or 19.4% above the property’s book value.

The REIT will recognize net proceeds of around $138.6 million and a net gain of approximately $14.6 million. The exit yield, based on CLAS’s ebitda for the FY2023 ended Dec 31, 2023, is about 3.2%.

“We are divesting Citadines Mount Sophia Singapore at close to $1 million per key, which is a significant premium to book value. Including Citadines Mount Sophia Singapore, CLAS has announced divestments of $408.1 million of assets at a premium to book value in the last eight months,” says Serena Teo, CEO of the managers.

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“The divestment of 10 mature assets will unlock $38.9 million in gains, at an average exit yield of about 3.8%. We aim to use the capital to reduce debt, fund our asset enhancement initiatives (AEI) or redeploy it into higher-yielding investments to increase the returns of our portfolio,” she adds. “The divestments can offer CLAS greater financial flexibility, potentially lowering our gearing by close to 2 percentage points.”

The divestment is part of CLAS’s active portfolio reconstitution strategy. The REIT completed the acquisition of four assets in the last three months at a higher entry yield. It is also looking to expand its portfolio with more yield-accretive assets, continues Teo.

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

The divestment is expected to be completed in 1Q2024. After the divestment, CLAS will have four lodging properties in Singapore. CLAS has three operational properties – Ascott Orchard Singapore, lyf one-north Singapore and The Robertson House by The Crest Collection.

Units in CLAS closed flat at 96 cents on Feb 1.

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