CapitaLand to buy Orchard area property for S$359m

CapitaLand said it will buy an Orchard area property from its associate, Ascott REIT, for S$359 million.

It will redevelop the property, Somerset Grand Cairnhill, into an integrated development comprising serviced residences (with hotel licence) and high-end residential properties.

CapitaLand is expected to sell the redeveloped serviced residences (with hotel licence) back to Ascott REIT for S$405 million in 2017.

Sales of the 200 to 250 high-end residential units, which should comprise 60 per cent of the development, are slated for launch next year.

Ascott, the serviced residences arm of CapitaLand, said it will be using part of gains from two divestments for investment opportunities in Europe.

These include divesting serviced residences The Ascott Raffles Place and the entire interest in Ascott Guangzhou to Ascott REIT for S$220 million and S$63.6 million, respectively.

Chong Kee Hiong, CEO of The Ascott Ltd, said: “I think selling to the REIT is in line with the price that the tender results have shown. Of course, we own 49 per cent of Ascott REIT — all things being the same, our preference obviously is to sell to Ascott REIT than to sell to third party.”

CapitaLand said the new Cairnhill serviced residences component is neither profitable nor loss-making, and analysts predict the upside will mainly come from the selling price of future residential units.

Source : CNA – 2012 Jul 10


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