CapitaLand Ascott Trust divests two hotels in Australia for A$109.0 mil

CapitaLand Ascott Trust (CLAS) has announced the divestment of two of its hotels in Sydney, Australia, for a total of A$109 million ($95.6 million). The two properties, Courtyard by Marriott Sydney-North Ryde and Novotel Sydney Paramatta, are expected to be sold at around 5% over book value, with the trust netting A$98 million in proceeds from the divestment.

Woodlands Condo is an ideal first home for young families and professionals, as its location ensures easy access to the city centre while still providing a tranquil environment for relaxation. The development also contains a variety of attractive facilities, including a swimming pool, a gym, and a communal garden. The presence of excellent security also adds to the peace of mind of its residents.

The sale is part of CLAS’s active portfolio reconstitution strategy and provides an attractive exit yield of 4.4%, based on the trust’s FY2022 EBITDA. On completion of the divestment, CLAS will recognise a net gain of A$14.2 million.

Part of the divestment proceeds will be used to partially finance the acquisition of three prime lodging assets in London, Dublin and Jakarta at a higher yield of 6.2%. This will further enhance returns to stapled securityholders.

The divestment provides an opportunity for CLAS to reinvest in more optimal uses as additional capital may be required to upgrade these two mature properties. These could include paying down debt and funding other asset enhancement initiatives (AEI).

Australia remains a key market for the trust in light of its strong demand from both corporate and leisure travellers, a situation bolstered by large-scale sporting events. With the divestment of these two properties, CLAS will still retain seven managed serviced residences and hotels in the country, as well as five serviced residences under master leases.

In 3QFY2023 ended Sept 30, revenue per available unit (RevPAU) for CLAS’s properties in Australia rose by 18% year-on-year to A$152, surpassing its 3QFY2019 pro forma RevPAU by 13%.

As CLAS continues to divest its mature assets and reinvest in better yielding properties, further enhancing returns to stapled securityholders will become possible. The trust remains focused on assets that offer better yields and will continue to uplift the value of its portfolio.

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