Ascott Residence Trust (Ascott Reit) has entered into an agreement to sell its Jakarta property, Country Woods, for about $33.91 million. The price tag, which was the highest sale price offered in a bidding process, is 60 percent above the $21.2-million valuation of the property. Ascott Reit expects to gain approximately $5.7 million from the sale.
“The sale proceeds from the divestment will provide Ascott Reit with greater financial flexibility to maximise returns to unitholders. Proceeds from the sale will be used to pare the group’s debt or for funding future acquisitions,” said Lim Jit Poh, chairman of Ascott Residence Trust Management.
This move is part of the company’s strategy to redeploy proceeds to optimize the use of its portfolio and to unlock the underlying property value that offers limited growth. Country Woods would have required huge capital expenditure in order to compete with rising competition in South Jakarta, and the company said the property has a 2.9 percent implied exit yield based on the sale price of $33.9-million price sale.
However, despite the divestment effort, Ascott Reit will continue to maintain its presence in Indonesia with its Somerset Grand Citra and Ascott Jakarta properties, which are both located in Jakarta’s shopping and business district.
The company also noted that it will look for more opportunities to divest properties that have reached optimal yield, but will also continue to seek new acquisitions to expand its portfolio.
The divestment transaction is expected to end in Q4.