Ascott Residence Trust joins CDL-CapitaLand Consortium to redevelop Liang Court site with partial sale of its GFA for S$163.3 million. Ascott Reit to use net proceeds from divestment to redevelop retained GFA into a new Somerset serviced residence with a hotel licence and refreshed lease of 99 years.
Ascott Residence Trust (Ascott Reit) will join City Developments Limited (CDL) and CapitaLand Limited (CapitaLand) to redevelop the Liang Court site into an integrated development. Ascott Reit has signed a put and call option agreement with CDL to divest 15,170 square metres (sq m) of the site’s gross floor area (GFA) for Somerset Liang Court Singapore for S$163.3 million. With net proceeds from the divestment, Ascott Reit will redevelop the retained GFA of 13,034 sq m into a new Somerset serviced residence with a hotel licence.
The lease tenure for the Liang Court site will be refreshed from 57 years to 99 years. Upon completion, the estimated project development expenditure of the new property is approximately S$300 million.
Ascott Reit is expected to recognise a total divestment gain and fair value gain of S$84.3 million. The divestment price of S$163.3 million is 44% above book value and 138% above the acquisition price. The net divestment gain is S$41.5 million and Ascott Reit is expected to realise a S$42.8 million fair value gain from its retained GFA in the land. Its EBITDA yield is estimated to be approximately 4% after the new Somerset serviced residence’s performance stabilises.
Slated to open in 2H 2024, the Somerset serviced residence will offer 192 units. It will be part of the proposed integrated development with a total GFA of 100,263 sq m, that will also comprise two residential towers, a commercial component and a hotel, subject to approval from the relevant authorities. Upon completion, CDL and CapitaLand’s 50:50 joint venture entities will own the residential and commercial components while Ascott Reit will own the Somerset serviced residence.
CDL Hospitality Trusts (CDLHT) will own the hotel under a forward purchase agreement with CDL. The proposed integrated development is targeted to open in phases from 2024. In line with the government’s plans to enhance the vibrancy of the precinct, the consortium also plans to rejuvenate the river promenade flanking the integrated development. This is expected to generate social activities around the proposed integrated development, increase footfall and improve pedestrian accessibility along the Singapore River.
Somerset Liang Court Singapore currently offers 197 apartment units. The new Somerset serviced residence will offer 192 units, with more efficient layout and room sizes. More than 50% of the units are one- and two-bedroom units, catering to expatriates and business executives on long stays. With a hotel licence, the Somerset property will also have the flexibility to cater to travellers on short stays.
Located in the heart of Clarke Quay, Singapore’s most popular riverfront lifestyle and entertainment precinct, and on the fringe of the city’s Central Business District, the proposed integrated development and the Liang Court site is linked to the Central Expressway via River Valley Road. The Liang Court site enjoys excellent accessibility with a direct link to Fort Canning MRT Station and its proximity to Clarke Quay MRT Station. It is connected to an overhead pedestrian bridge that provides direct access to Fort Canning Park.
“This transaction is part of our ongoing strategy to actively reconstitute Ascott Reit’s portfolio to ensure stable returns to unitholders. With the combination of Ascott Reit and Ascendas Hospitality Trust10, we have an enlarged balance sheet that gives us greater capacity to redevelop the property, build our pipeline of quality yield-accretive assets and enjoy potential development gain. There are limited completed and yield-accretive assets in Singapore, one of our top five markets contributing 10% to Ascott Reit’s gross profit11. This will be our second development project. It will allow Ascott Reit to potentially benefit from the development upside and optimise returns for the benefit of its unitholders.” – Mr Bob Tan, Ascott Residence Trust Management Limited’s (ARTML) Chairman
He added: “Somerset Liang Court Singapore has enjoyed capital appreciation, and a healthy average occupancy rate of about 90%. With revitalisation plans in place for the Singapore River and Clarke Quay precinct and the proposed construction of a new integrated development, it is an opportune time to recycle our capital into redeveloping our ageing property into a new Somerset serviced residence and refresh the land’s lease to 99 years. We will strengthen our presence in a prime location in Singapore’s popular lifestyle hub. We will continue to seek yield-accretive acquisitions, as well as development and conversion projects to maximise returns for unitholders.”
“The new Somerset serviced residence will be part of an iconic riverfront integrated development set to be the next landmark in Singapore. It will offer 192 units, with more efficient layout and room sizes. More than 50% of the units are one- and two-bedroom units, catering to expatriates and business executives on long stays. With a hotel licence, the Somerset property will also have the flexibility to cater to travellers on short stays. It will offer the comfort of a home, apartments with kitchen, quality services and flexibility in the duration of leases.” – Ms Beh Siew Kim, ARTML’s Chief Executive Officer
Summary of proposed integrated development
|Location||River Valley Road / Tan Tye Place / Clarke Quay
|Description||An integrated development comprising:
· Two residential towers comprising around 700 apartments
· Commercial component
· Serviced residence with a hotel licence
· Basement car park
|Site area||12,925.4 sq m
|GFA||· Residential 60,158 sq m
· Commercial 11,530 sq m
· Hotel 15,541 sq m
· Serviced residence 13,034 sq m
(with a hotel licence)
· Total 100,263 sq m
|· Residential and commercial components: CDL and CapitaLand on a 50:50 basis
· Hotel: CDL
· Serviced residence with a hotel licence: Ascott Reit
|Land tenure||Leasehold expiring 1 May 2077 (around 57 years remaining)
In-principle approval has been obtained for lease top-up to a fresh 99 years.
|Phased completion from 2024|