Ascendas Hospitality Trust sells Beijing hotels for $235.9m

The purchase price is 101.5% higher than its latest valuation.

Ascendas Hospitality Trust (A-HTRUST) sold Beijing Novotel Sanyuan and Ibis Beijing Sanyuan (Beijing Hotels) for $235.9m. The buyers will also pay a look fee of $4.8m.

According to an announcement, net proceeds are estimated to be $218.7m, with a net gain of $112.7m. The purchase price also represents a premium of 101.5% above its latest valuation. It also 178% higher than the initial purchase price in 2012.

Novotel Beijing Sanyuan is a midscale hotel located in Beijing in the Chaoyang District, adjoining Sanyuan Bridge of the East Third Ring Road and the Airport Expressway. The 17-storey hotel offers 306 guest rooms.

Ibis Beijing Sanyuan is an economy hotel adjacent to Novotel Beijing Sanyuan. The 14-storey hotel has 397 guest rooms.

A-HTRUST said the purchase price of the hotels translated to a net property income yield of about 3.3%.

The sale is expected to be completed by end May 2018 with the proceeds expected to be initially used to repay debt ahead of any future acquisition.

DBS Equity Research said they were "surprised" by the disposal of the Beijing hotels, but understood that potential buyers periodically approach the company.

"We believe this transaction will give confidence over A-HTRUST’s property valuations especially given the market’s scepticism over A-HTRUST’s book value resulting in A-HTRUST historically trading below 1x P/Bk," said DBS analyst Mervin Song.