Ascott Divests Stake In London Property For S$11.6 Million Profit
The Ascott Group has divested its interest in a freehold site at York Road in Wandsworth, London.
Its 75 per cent owned subsidiary, Somerset (UK) Pte Ltd, together with UK developers Rialto Homes Plc and Frogmore Developments Limited, have entered into an agreement to dispose the entire issued share capital of York Road Limited, which owns the property, for £12.3 million (S$32.2 million).
As Somerset (UK) holds 50 per cent stake in York Road Limited, Ascott’s share of the proceeds, is £4.62 million (S$12.1 million). Ascott’s gain arising from the sale is S$11.6 million.
The sale price agreed with the buyer, St George South London Limited, is based on the net asset value of York Road Limited, valuing the underlying property at £49 million (S$128.2 million).
At sale completion yesterday (May 28), St George also discharged York Road Limited’s shareholders’ loans of £10.8 million (S$28.3 million) and bank loans of £23.7 million (S$62.1 million).
The Ascott Group is the largest international serviced residence chain in the UK with 860 units in London, Manchester and Glasgow. The group has 8,000 serviced residence units in 20 cities across Asia, Australasia and the UK.
Ascott’s chief executive officer, Mr Kee Teck Koon, said that the asset disposal is in line with the group's efforts to focus on its core serviced residence business. The land had been acquired for mixed use development.
The divestment is expected to increase Ascott’s earnings per share and net tangible assets per share by 0.75 cents for the financial year ending Dec 31, 2002. On April 25, Ascott had announced a first quarter 2002 profit of S$9.3 million and earnings per share of 0.6 cents.
In the same first quarter results announcement, Mr Kee had said that the group plans to divest S$50 to S$100 million non-core assets in the second and third quarters of this year. The York Road divestment, with a value of $20 million in Ascott’s books, leaves another $30 to $80 million to be divested before October.