Ascott Divests Stake in Shanghai Residential Land
The Ascott Group, a leading international serviced residence chain, is divesting its interest in a 10,000 sqm site in Shanghai's central business district. The stake is owned by its subsidiary, Ascott Residences Pte Ltd.
Together with Singapore-based Reco Red River Pte Ltd and Hong Lim Investments Pte Ltd, a wholly-owned subsidiary of Temasek Capital (Pte) Ltd, Ascott Residences Pte Ltd has signed an agreement to sell the entire issued and paid-up share capital in Hua Li Holdings Pte Ltd (Hua Li) to a China-based developer, Shanghai Yong Ye Enterprise (Group) Co Ltd, for US$19 million (S$34 million).
Hua Li owns 70 per cent of Shanghai Hua Li Real Estate Development Co, which owns the site. Located in Luwan district, the land is slated for residential and serviced residence development.
Ascott's share of the purchase price is US$11.4 million (S$20.4 million), and its gain from the sale is US$1.1 million (S$2 million).
The Ascott Group’s chief executive officer, Mr Kee Teck Koon, said: "The sale is part of our strategy to selectively sell core properties, in addition to the divestment of non-core assets, to channel capital into higher yielding investments and grow shareholder returns.
"We seek to invest our capital, in partnership with other investors, in income generating operational or near operational serviced residences rather than in greenfield projects.
"This is particularly in cities such as Shanghai, where there are many quality residential buildings that can be operated as serviced residences. This will enable us to achieve higher capital productivity, even as we rapidly expand our global portfolio."
Earlier this month, Ascott had divested its stake in the Somerset Grand Shanghai serviced residence for US$23.1 million (S$41.5 million) while retaining the management contract. The sale enabled Ascott to realise capital values for reinvestment.
Additionally, in Ascott’s first quarter results announcement on April 25, Mr Kee 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 group’s disposal last month of a non-core site in Wandsworth, UK with a value of S$20 million in Ascott’s books, leaves another S$30 to S$80 million non-core assets to be divested before October.
Proceeds from the disposals will be used to fund investments in higher yielding serviced residence projects and Ascott’s expansion in Japan, Korea and several major European cities.
The Hua Li transaction is expected to increase both Ascott’s earnings per share and its net tangible assets per share by 0.13 cents for the financial year ending December 31, 2002.
In China, The Ascott Group is today the largest serviced residence chain with 1,500 apartments in Shanghai, Beijing and Tianjin. Internationally, Ascott is a leading serviced residence operator with over 8,000 serviced residence units in 20 cities across Asia, Australasia and the UK.
About The Ascott Group
The Ascott Group is a leading international serviced residence chain with 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 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 Ascott 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 Asia and Australasia.
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.
Headquartered in Singapore, The Ascott Group's shares trade as 'Ascott' on the Singapore Exchange. It is the serviced residence arm of CapitaLand Limited, Southeast Asia’s largest listed property company.