CapitaLand Ascott Trust proposes renewal of three French master leases
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The stapled group will acquire the holding company that owns the largest asset – the 230-unit Cavendish London hotel.
PHOTO: CAPITALAND INVESTMENT
Vivienne Tay
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SINGAPORE – CapitaLand Ascott Trust (Clas) on Monday said it will seek approval from stapled security holders for several interested person transactions at its upcoming Oct 24 extraordinary general meeting (EGM).
These include the $530.8 million acquisition of three lodging assets in London, Dublin and Jakarta, announced in August, as well as the renewal of three master leases for serviced residence properties in France, expiring on Dec 31, 2023.
The managers said in a bourse filing that master lease agreements were entered into with Citadines, which is indirectly owned by The Ascott, for La Clef Louvre Paris, Citadines Presqu’ile Lyon and Citadines Place d’Italie Paris.
Each of the renewed master leases, to be inked with Citadines, will span 12 years from Jan 1, 2024.
The new rent for financial year 2024 will be €5.6 million (S$8.1 million), 33.3 per cent higher than the existing financial year 2022 rent of €4.2 million.
The rent received under each agreement will be either the fixed or variable rent per annum, whichever is higher. The fixed rent is indexed to the French commercial lease index published by the French national statistics bureau, the managers noted.
They added that having fixed rents will provide certainty to Clas’ income, while having variable rents will allow the stapled group to benefit from any upside from travel recovery and demand drivers in Paris and Lyon.
“The city of Paris is also hosting the 2024 Summer Olympics, which will be an added tourism boost to the city,” the managers said.
The managers said in a bourse filing that purchase agreements were entered into with sponsor Ascott for The Cavendish London hotel, the Temple Bar Hotel in Dublin, Ireland, and the Ascott Kuningan Jakarta serviced residence.
The stapled group will acquire the holding company that owns the largest asset – the 230-unit Cavendish London – at a purchase consideration of £116.3 million (S$194.1 million). The property is situated in Mayfair, a high-end shopping district in central London.
The consideration takes into account the holding company’s consolidated net asset value (NAV) of £62.2 million, an agreed property value of £215 million, and £54.1 million in shareholder loans extended by Ascott as at May 31.
Clas will acquire the 136-unit Temple Bar Hotel for a purchase consideration of €70 million – equal to the agreed property value. The amount takes into account the hotel’s independent valuations.
The holding company that owns Ascott Kuningan Jakarta will be acquired for US$40 million (S$54.7 million) – based on a consolidated NAV of US$1.6 million, an agreed property value of 620 billion rupiah (S$54.1 million), and $50.7 million in shareholder loans from the Ascott as at May 31.
The managers expect the total acquisition outlay to be around $378.6 million, comprising the purchase consideration of $357.8 million, a $5.3 million acquisition fee payable to the managers, and $15.5 million in estimated professional and other fees and expenses.
Upon completion, the property holding companies that own the three properties will enter into separate management agreements with certain Ascott wholly owned subsidiaries.
Clas is also expected to increase its total distribution by $13.5 million and its distribution per stapled security by 1.8 per cent on a financial year 2022 pro forma basis. Meanwhile, its distribution yield is projected to rise to 5.5 per cent from 5.4 per cent.
The managers expect to complete the proposed acquisitions by the fourth quarter of 2023.
Stapled security holders will have to vote to approve the transactions at an EGM to be convened on Oct 24 at 3pm.
Independent financial adviser Deloitte & Touche Corporate Finance has said that the interested person transactions are on normal commercial terms and not prejudicial to the interests of Clas and its minority stapled security holders.
The managers’ independent directors have also recommended that stapled security holders vote in favour of the resolutions.
Clas’ stapled securities closed 1.1 per cent lower at 88.5 cents on Monday. THE BUSINESS TIMES
