CapitaLand Ascott Trust divests two hotels in Australia for AUD109.0 million 

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(Photo: RENDY ARYANTO/Visual Verve Studios)

CapitaLand Ascott Trust (CLAS) is divesting two mature  hotels in Sydney, Australia to an unrelated third party for a total of AUD109.0 million (S$95.6 million1). Situated outside of the city centre, the two properties are Courtyard by Marriott  Sydney-North Ryde and Novotel Sydney Paramatta.

The two properties will be divested at about 5% above book value2 and net proceeds of the  divestment is expected to be AUD98.0 million (S$85.9 million). The exit yield3is 4.4% and  CLAS will recognise a net gain of AUD14.2 million (S$12.4 million)4. The divestment of  Courtyard by Marriott Sydney-North Ryde and Novotel Sydney Paramatta is expected to be  completed in 1Q 2024 and 3Q 2024 respectively.

Serena Teo, Chief Executive Officer of CapitaLand Ascott Trust Management Limited and  CapitaLand Ascott Business Trust Management Pte. Ltd. (the Managers of CLAS), said: “The  divestment of these two properties outside of central Sydney is part of our active portfolio  reconstitution strategy. CLAS remains focused on assets that offer better yields and will  further uplift the value for our portfolio. As additional capital will be required to upgrade these

two mature properties, the divestment will enable us to redeploy the proceeds into more  optimal uses such as but not limited to paying down debt and funding our other asset  enhancement initiatives (AEI). The exit yield is also at an attractive level that compares  favourably against the current cost of borrowing in Australia. We recently divested four mature  serviced residences in regional France at an exit yield of about 4%. Part of the divestment  proceeds will also be used to partially finance our acquisition of three prime lodging assets in  London, Dublin and Jakarta at a higher yield of 6.2%5, further enhancing our returns to Stapled  Securityholders.”

“Australia remains a key market for CLAS. We continue to see strong demand from corporate  and leisure guests for our serviced residences and hotels in Australia, boosted by large scale

(Photo: RENDY ARYANTO/Visual Verve Studios)

sporting events. Post-divestment, our remaining seven serviced residences and hotels under  management contracts will enable us to capture the travel demand while our five serviced  residences under master leases will continue to provide us with stable income,” added Ms Teo.

In 3Q 2023, revenue per available unit (RevPAU6) for CLAS’ properties in Australia was 18%  higher year-on-year at AUD152, exceeding 3Q 2019 pro forma RevPAU7 by 13%. After the  divestment of Courtyard by Marriott Sydney-North Ryde and Novotel Sydney Paramatta,  CLAS will have 12 remaining serviced residences and hotels in Australia, in cities such as  Brisbane, Melbourne, Perth and Sydney.

This includes Novotel Sydney Central, one of eight properties that are in CLAS’ AEI pipeline to create greater value for Stapled Securityholders. Novotel Sydney Central will undergo an  extensive AEI which includes a brownfield extension to add eight more floors and 72 more  rooms, a 28% increase from the current inventory. The property’s gross floor area will also  expand by 10%. Post-AEI, the property’s value8is expected to increase by about AUD173.3  million (approximately S$151.9 million) as compared to the valuation as at 31 December 2022  of AUD166.5 million (approximately S$150.3 million). Based on the valuation by Colliers, the  property’s EBITDA is expected to increase by AUD10.1 million (approximately S$8.9 million)  on a stabilised basis, with an 11.3%9 yield on AEI cost.


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