The Ascott Group has agreed to sell the freehold Hotel Asia on Scotts Road for $147 million, instead of developing it into a serviced apartment

The Ascott Group has agreed to sell the freehold Hotel Asia on Scotts Road for $147 million, instead of developing it into a serviced apartment building as previously announced, the company said yesterday.

Ascott said it will make a net gain of about $22.2 million from the sale. Chief executive Cameron Ong said the property was bought by an overseas investor, but declined to say from where. Market sources suggested the buyer could be from the Middle East.

The buyer has not yet decided what to do with the property, Mr Ong said. One possibility is that Ascott could continue with plans to remake Hotel Asia into serviced residences, and just manage the property instead of owning it as well.

Ascott bought Hotel Asia in July 2006 for $104 million, and announced two months later that it would spend $10 million to refurbish the development, changing it into a 148-unit Citadines Singapore Scotts. The property was slated to open in mid-2007.

Yesterday, Ascott said the proposed divestment presents a ‘timely opportunity for the group to monetise its assets and realise strong divestment gain of approximately $22.2 million in less than a year’.

‘We have always kept an open mind about Hotel Asia and time-to-market is key to our expansion,’ said Mr Ong. ‘Ascott was approached by the buyer and the offer presented to us is very attractive and timely given the robust uptrend in the Singapore real estate market.’ The price was arrived at on a willing buyer, willing seller basis, Ascott said.

Mr Ong said that refurbishment works, which were due to start in mid-January this year, had not yet begun when the buyer approached Ascott.

He added that Ascott will continue to look for potential sites to expand its presence in Singapore to achieve its target of 1,600 serviced residence units by 2010. With the sale of Hotel Asia, Ascott’s current and upcoming portfolio in Singapore stands at 1,054 units across 11 properties.

Ascott will go ahead with plans for two other upcoming projects, Mr Ong said. The group’s 152-unit flagship Ascott Raffles Place at Finlayson Green will be ready by the first half of 2008. Elsewhere, Ascott’s Citadines Singapore Mount Sophia, which will be part of an integrated project by parent company CapitaLand comprising serviced apartments, office and small office home office (soho) units, and a retail component, will be ready in early 2009.

Hotel Asia has land area of 3,330 sq m and gross floor area of 8,650 sq m.

Ascott’s stock closed one cent up at $1.67 yesterday.

Source: The Business Times, 22 February 2007