Ascott Sells Stake In A Shanghai Serviced Residence
The Ascott Group, Asia Pacific’s largest serviced residence company, is selling its interest in the 334-unit Somerset Grand Shanghai serviced residence for a profit of US$0.6 million (S$1 million).
Ascott, through its wholly owned subsidiary LC Genesis (Shanghai) Pte Ltd, and Shanghai Yong Ye Co Ltd today (June 6) signed an agreement to sell all the registered share capital of Shanghai Yong Liang Real Estate Development Co, Ltd to Rodamco Shanghai Apartments Limited, a subsidiary of Rodamco Asia NV, for US$32.7 million (S$58.6 million).
Yong Liang owns 327 of the 334 apartments in Somerset Grand Shanghai, a twin tower 27-storey serviced residence complex in Luwan district, a prime area in Shanghai’s central business district.
As LC Genesis owns 72 per cent of Yong Liang, Ascott's share of the sale purchase price is US$23.1 million (S$41.5 million). This comprises Ascott's share of the net asset value of Yong Liang and LC Genesis' loans to Yong Liang. Ascott's gain from the sale is US$0.6 million (S$1 million).
The agreed sale price is based on the estimated net asset value of Yong Liang on completion, valuing the underlying property at US$82.6 million (S$148.3 million). As part of the agreement, all shareholder loans made to Yong Liang will be assigned to Rodamco Shanghai. LC Genesis will also be released of liabilities from bank loans taken by Yong Liang.
The sale is to be completed not later than July 31, 2002.
Ascott will continue to manage Somerset Grand Shanghai for the next five years, with the option to renew the management contract for a further five years on mutually agreed terms.
Somerset Grand Shanghai is Ascott’s first serviced residence in China. Managed by Ascott since its opening in 1998, it has consistently outperformed its competitors in the Shanghai serviced residence market in occupancy and rental rates.
Asset Light Strategy
Mr Liew Mun Leong, Ascott’s deputy chairman, and president and CEO of Ascott’s parent company CapitaLand Limited, said: "The disposal by Ascott, CapitaLand’s serviced residence arm, is part of the CapitaLand group’s strategy to achieve high capital productivity and be a fee- based and asset light multinational.
"This transaction is also significant in that it broadens our relationship with yet another leading international institutional investor. It marks the first collaborative relationship between a CapitaLand strategic business unit and Rodamco Asia. We look forward to deepening this relationship."
The Ascott Group’s chief executive officer, Mr Kee Teck Koon, said: "We are committed to building a dominant presence in key cities in China. However, we will periodically and selectively sell mature serviced residence assets to realise capital values of the properties which we have developed, or added value to, while retaining the management of these properties.
"We will then reinvest the capital in new and higher growth projects or markets. The disposal of Somerset Grand Shanghai, with retention of the management contract, is illustrative of actions we are taking to boost our return on equity, and at the same time, grow our global footprint without straining our existing capital base."
Somerset Grand Shanghai is a premier purpose-built serviced residence with 334 apartments comprising one to three bedroom units. Facilities include an indoor heated swimming pool, clubhouse, tennis court, retail shops and an international kindergarten.
In China, Ascott is today the largest serviced residence chain with over 1,400 serviced apartment units in Shanghai, Beijing and Tianjin. The Ascott Group is a leading international serviced residence operator with over 8,000 serviced apartments in 20 cities across Asia, the UK and Australasia.
In its drive for leadership in the global serviced residence industry, the group today commands pole positions in many gateway cities such as Singapore, London, Beijing, Shanghai, Jakarta, Hanoi, Ho Chi Minh City, Sydney and Melbourne.
The transaction is not expected to have any material effect on Ascott’s earnings per share, and net tangible assets per share for the financial year ending December 31, 2002.
About Rodamco Asia NV
Rodamco Asia NV is a pan-Asian property investment company with corporate seat in Rotterdam, the Netherlands. It directly invests in, and actively manages, a diversified portfolio of quality properties in growing market segments across Asia.
Headed by an Asian-based senior management team with extensive experience in Asian real estate, Rodamco Asia aims to maximise shareholder value through proactive and skillful management of its Asian real estate portfolio on behalf of investors worldwide.
Rodamco Asia’s property portfolio comprises investments in the office, residential / hospitality, retail and infrastructure / industrial sectors in China, Indonesia, Malaysia, the Philippines, Singapore, South Korea and Thailand.
About The Ascott Group
The Ascott Group is Asia Pacific's largest serviced residence company. It manages a portfolio of over 8,000 serviced residence units in 20 cities in 11 countries across Asia, Australasia and the United Kingdom.
In its drive for international leadership in the serviced residence industry, the group today commands pole positions in many gateway cities such as Singapore, London, Beijing, Shanghai, Jakarta, Hanoi, Ho Chi Minh City, Sydney and Melbourne.
The group pioneered the Asia Pacific's first branded luxury serviced residence in 1984. Today, it boasts an 18-year industry track record and serviced residence brands that are market leaders in the Asia Pacific.
The group’s luxury The Ascott brand projects an elegant lifestyle appealing to top executives. The Somerset brand offers stylish, contemporary living for senior to upper management executives.
Background - About The Ascott Group's Serviced Residences in China
The Ascott Pudong -- 248 units, Lujiazui, Pudong
Boasting spectacular views of the Huangpu River, The Ascott Pudong offers elegantly furnished one to four-bedroom apartments and penthouses. Facilities include a business centre, an indoor heated swimming pool, sauna, indoor tennis court, gym and lounge.
Somerset Grand Shanghai -- 334 units, Jinan Road, Luwan District
Located along Huai Hai Zhong Road, Somerset Grand Shanghai is in the heart of Shanghai's main business, shopping and dining belt. It offers one to three-bedroom units, and facilities such as an indoor heated swimming pool and an international kindergarten.
Somerset Xu Hui -- 167 units, Shanxinan Road, Xu Hui District
Situated in the Xu Hui residential estate, Somerset Xu Hui is close to shopping and entertainment facilities in Huai Hai Zhong Road and Xu Jia Hui. It offers spacious one to three-bedroom units with speedy Internet access.
The Ascott Beijing -- 272 units, Dong Huan Nan Road, Jian Guo Men Wai
Centrally located in Beijing's business and shopping district, The Ascott Beijing is close to the China World Trade Centre. It offers from one-bedroom units to penthouses with designer fittings, and an indoor glass-roofed swimming pool.
Somerset Fortune Garden -- 221 units, Liang Ma Qiao Road, Chao Yang District
Located within the prime Yen Sha business district, Beijing's third embassy belt, Somerset Fortune Garden is near international schools and entertainment facilities. Units range from one to four-bedroom apartments, with private balconies and scenic city views.
Somerset Olympic Tower -- 169 units, Chengdu Dao, Heping District
In the heart of Tianjin's major up-market shopping area and prime residential district, Somerset Olympic Tower is conveniently close to international schools and the Tianjin railway station. It offers one to four-bedroom units, duplexes and penthouses, and the full range of amenities.