The Ascott Group Sells Its Retail Management Business for S$8.5 million
The Ascott Group has entered into an agreement to assign all its retail property management contracts to CapitaLand Commercial Limited for S$8.5 million. As part of this agreement, the group’s retail property management staff will also be absorbed by CapitaLand Commercial from July 1.
The agreement is part of The Ascott Group’s divestment programme for its non-core retail property business, in line with its strategy to focus on its main serviced residence business.
The management contracts are for the group’s Junction 8, Funan The IT Mall, Liang Court and Scotts shopping centres in Singapore; The Exchange and Huiteng Metropolis in China; and Gurney Plaza in Penang.
The Ascott Group’s chief executive officer, Mr Kee Teck Koon, said: "The Ascott Group’s retail team has over the years built up a considerable track record and goodwill in retail property management, locally and internationally. These experienced professionals have demonstrated their expertise in maximising the value of retail properties and have sustained above market occupancy at prime rates at the shopping centres we owned or managed.
"This agreement with CapitaLand Commercial represents the best way to preserve the retail management franchise which The Ascott Group has built up, and provides business continuity for our partners, tenants and other business associates. Above all, it provides the most attractive platform for our retail property management staff to realise an even more challenging and fulfilling future."
In line with its strategy to divest its non-core assets, the group recently sold its Orchard Point retail podium, and announced plans to dispose another S$400 to S$500 million of its retail properties in Singapore in the next few months.
Two-thirds of the proceeds from the divestments will be used to retire debts, which together with cash generated from operations will lower the group’s current gearing of 0.9 to below 0.6.
The remaining one-third of the divestment proceeds will be set aside to fund the company’s serviced residence expansion in Europe, North Asia, Australia and the US. The group aims to grow its network of serviced residences to 15,000 units by 2005, from its current 6,000 units.
About The Ascott Group
The Ascott Group is Asia Pacific’s largest serviced residence company. Its 'The Ascott' and 'Somerset' serviced residence brands are market leaders in the region. Created through the merger between The Ascott Limited and Somerset Holdings Limited in November 2000, the group owns and / or manages over 6,000 serviced residence units in 16 cities in 10 countries.
Headquartered in Singapore, The Ascott Group’s shares are listed on the Singapore Exchange as "Ascott". The group is the serviced residence arm of CapitaLand Limited, Southeast Asia's largest listed property company.
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