REIT Financial News - 6 AUG 2010: Ascott Reit divests Jakarta property at S$33.9 million, 60% above valuation

Ascott Reit divests Jakarta property at S$33.9 million, 60% above valuation. See:

• Press Release
• Announcements
• Presentation Slides

Key Points

• 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$33.91 million 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.

Author's Note
Previous analyst reports have already indicated that Ascott Reit is likely to divest its properties. From the announcements, the rationale for the divestment is as follows:

"The Divestment is in line with the 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, the Property would require significant capital expenditure in order for it to compete with the increased competition in the vicinity."

It is also indicated that the proceeds from the Sale will be used to pare down the Group’s debts or for funding future acquisitions.

This divestment exercise follows the recent divestment of Starhub Centre and Robinson Point by Capitacommercial Trust. So far market has reacted positively to the divestment exercises of CCT, with its share price hitting the 52 weeks high of 1.4.