China: Singapore-listed Ascott Residence Trust (ART) has sold Somerset Xu Hui Shanghai to Shanghai-based fund manager Jiecheng Capital.
The REIT confirmed the RMB 1.05 billion ($160 million) this week. It will use some of the proceeds to acquire three residential properties in Japan’s fifth-largest city, Sapporo.
ART said the assets on the northern island of Hokkaido would generate yields of around four per cent, compared with the two per cent cap rate of the Shanghai property.
“ART’s acquisitions of these rental housing properties will increase our presence in the longer-stay accommodation segment and diversify from hospitality assets which are facing headwinds due to COVID-19, further enhancing income stability,” said Bob Tan, chairman of the REIT’s managers.
ART, which owned 86 properties at the end of 2020, primarily holds serviced residences operated by CapitaLand’s residential division, The Ascott Limited, under the Ascott, Somerset, Citadines and Lyf brands.
The Somerset Xu Hui consists of 168 units in a 32-storey building on South Shaanxi Road.
“Prime-location residential assets in Shanghai are highly sought after by investors because both sale and rental pricing are going up,” said Danny Zheng, director of capital markets for Shanghai at Knight Frank. “Many investors believe Tier 1 city prime residential properties provide a safety net amid the post-COVID high-inflation economic environment.”
