China: Ascott Residence Trust (ART) has agreed to sell Somerset Xu Hui Shanghai for 1.05 billion yuan (£154 million) to an unrelated third party.
Somerset Xu Hui Shanghai is a 32-storey serviced apartment building with a five-storey commercial podium and a basement car park. The property’s agreed value is 171 per cent above its book value, according to a pre-market filing earlier today.
ART is expecting to net a gain of 536.6 million yuan (£59 million) from the sale, which is slated to take place in Q2 2021. Estimated net proceeds of about 944.6 million yuan (£104 million) may be used to pare down the debts of ART, fund potential acquisitions or for other general corporate purposes, said the managers in its filing.
Due to the ongoing Covid-19 situation in China and strict government regulation of the country’s property market, ART’s managers said it sees limited operational growth prospects and capital appreciation upside to the property.
Somerset Xu Hui Shanghai’s sale therefore presents an opportunity to unlock the asset’s underlying value and redeploy the proceeds in higher yielding assets to enhance the returns of ART’s portfolio, they added.
In 2020, ART sold its Ascott Guangzhou and Citadines Didot Montparnasse Paris properties for a total of S$191.4 million (£105 million).
