Ascott Reit divests Jakarta property at $34mln

Company eyes S$5.7mln net gain while it pursues to seek acquisitions for further portfolio expansion.

Ascott Residence Trust (Ascott Reit) has entered into a sale and purchase agreement for the sale of Country Woods, Jakarta in Indonesia. The agreed price of the property at S$33.91million - the highest price submitted in a competitive bidding process - is 60% above the property’s valuation as at 30 June 2010 of S$21.2 million.

Ascott Reit is expected to enjoy an estimated net gain of S$5.7 million from the divestment. The transaction is expected to be completed in the fourth quarter of 2010, according to Ascott Reit report.

Mr Lim Jit Poh, Ascott Residence Trust Management Limited’s (ARTML) Chairman, said: “The divestment of Country Woods, Jakarta provides Ascott Reit an opportunity to divest the asset at an attractive price of S$33.9 million which is 60% above the last valuation. The sale proceeds from the divestment will provide Ascott Reit with greater financial flexibility to maximise returns to unitholders. Proceeds from the sale will be used to pare down the Group’s debt or for funding future acquisitions.”

Mr Chong Kee Hiong, ARTML’s Chief Executive Officer, said, “The divestment is in line with Ascott Reit’s strategy to unlock the underlying value of a property that has reached a stage that offers limited growth and re-deploy proceeds to optimise the yield of the portfolio. Moreover, Country Woods would require significant capital expenditure in order for it to compete with the increased competition in South Jakarta. The implied exit yield of Country Woods is 2.9% based on the agreed sale price of S$33.9 million.”

Mr. Chong added, “Following the divestment, Ascott Reit continues to have a presence in Indonesia with Ascott Jakarta and Somerset Grand Citra, Jakarta which are both located in the heart of the city’s business and shopping district, the Golden Triangle. Ascott Reit will continue to seek yield accretive acquisitions to further expand the portfolio and look for opportunities to divest properties which have reached optimal yield. ”

Country Woods, Jakarta Located in the heart of South Jakarta, Country Woods operates as a rental housing property. It comprises 36 townhouses, 78 bungalows and 137 apartment units occupying a net lettable area of 48,490 square metres and has a tenure of 20 years expiring on 22 October 2025.

Country Woods, Jakarta contributed about S$0.4 million or 1% to Ascott Reit’s 1H 2010 gross profit.