CapitaLand Ascott Trust sells four French properties for $65 million

SINGAPORE – CapitaLand Ascott Trust (Clas) has sold four mature serviced residences in regional France for a total of €44.4 million (S$64.6 million) as part of its portfolio reconstitution strategy, its manager said on Monday.

The sale amount was 63 per cent higher than the properties’ book value as at end-2022, with net proceeds at about €34.1 million.

Based on financial year 2022’s earnings before interest, taxes, depreciation and amortisation (Ebitda), the exit yield was approximately 4 per cent. This translated to a net gain of around €1.2 million, the manager noted.

The four properties divested – Citadines Croisette Cannes, Citadines Prado Chanot Marseille, Citadines Castellane Marseille and Citadines City Centre Lille – have reached the “optimal stage of their life cycles”.

The divestment enables Clas to redeploy the proceeds to higher-yielding assets, said Ms Serena Teo, chief executive of the trust’s manager.

The proceeds from the sale will be used for asset enhancement initiatives in Europe and to partially finance Clas’ recent proposed acquisition of three prime lodging assets in London, Dublin and Jakarta.

In August, Clas signed a memorandum of understanding with its sponsor Ascott for a proposed accretive acquisition of three lodging assets, namely The Cavendish London, Temple Bar Hotel in Dublin and Ascott Kuningan Jakarta, at an agreed property value of $530.8 million.

“Over the past three years, we have successfully divested properties at a premium to book value and invested the proceeds in higher-yielding assets, increasing our total distribution,” said Ms Teo.

She highlighted that the proposed acquisition is expected to increase the total distribution by $13.5 million and the distribution per stapled security (DPS) by 1.8 per cent on a financial year 2022 pro forma basis.

The Ebitda yield of the proposed acquisition would be 6.2 per cent on a financial year 2022 pro forma basis, more than 2 per cent higher than the exit yield from the divestment of the four properties in France.

After renovations for The Cavendish London and Temple Bar Hotel, as well as milestone payments for the acquisition, the trust manager expects an increased yield of 6.8 per cent.

In the previous financial year, Clas invested $420 million in 15 accretive acquisitions, contributing to the 19 per cent increase in its DPS in the first half of 2023.

“The new properties (in the proposed acquisition) are largely longer-stay properties with average occupancy rates of over 95 per cent, further enhancing Clas’ stable income streams,” Ms Teo said.

Clas still holds 12 properties in France post-divestment, predominantly located in Paris. These include La Clef Tour Eiffel Paris and Citadines Les Halles Paris, which are undergoing asset enhancement initiatives to uplift their profitability, said the manager.

Clas stapled securities closed up 0.5 per cent at 98 cents on Monday.

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