Ascott Group has agreed to buy a 99-year leasehold serviced residence in town for $79.3 million

THE Ascott Group has agreed to buy a 99-year leasehold serviced residence in town for $79.3 million, the company announced yesterday.

The property, located at Wilkie Road, is part of lifestyle complex Wilkie Edge, which is under construction. Wilkie Edge is a mixed development consisting of offices, retail, and food and beverage outlets.

The acquisition, to be funded from internal resources and external borrowings, will bring Ascott’s property portfolio in Singapore to 11, with a combined 1,042 units. It will be named Citadines Singapore Mount Sophia and open in the first half of 2009.

‘Citadines Singapore Mount Sophia is strategically located in the heart of Singapore’s upcoming arts, learning and entertainment hub in the Bras Basah-Bugis area,’ said Ascott president and CEO Jennie Chua. ‘It is in the city centre with excellent access to the central business district and the shopping and entertainment attractions of Orchard Road.’

The Ascott Group had earlier inked a memorandum of understanding to manage Wilkie Edge’s serviced residences for an initial 10-year term with an option to extend it for another 10 years.

‘Strong demand for extended-stay accommodation, the vibrant real estate market, and the property’s attractive location are reasons for Ascott to acquire leasehold interests in the serviced residence instead of only managing the property for fee income,’ added Ms Chua. ‘This will enable us to maximise shareholder returns.’

The new property will have 154 units and be Ascott’s first Citadines-branded serviced residence in Singapore. It will cater to the young and trendy, expatriates working in the creative services community as well as foreign students and academics from the nearby Singapore Management University, Nanyang Academy of Fine Arts and LaSalle College of The Arts.

The acquisition agreement is inked between Ascott’s indirect wholly owned subsidiary Ascott Scotts Pte Ltd, CapitaLand Selegie Pte Ltd and HSBC Institutional Trust Services, which is the trustee of CapitaCommercial Trust (CCT).

Just last month, CCT had announced that it is buying Wilkie Edge for $262 million. The pact comes with an option to lease the serviced apartments for a $79.3 million consideration. When this option is exercised, CCT’s purchase price for Wilkie Edge will be reduced to $182.7 million.

Source : Business Times - 30 Aug 2007