Ascott Raffles Place Singapore SOLD to Famous Investor Cheong Sim Lam for S$353.3 million

Ascott Raffles Place Singapore SOLD to Famous Investor Cheong Sim Lam for S$353.3 million

Ascott Reit sold Ascott Raffles Place Singapore, the serviced apartment building for S$353.3 million to Cheong Sim Lam.

Mr. Cheong is one of the Singapore’s leading private investors, belongs to family who have developed Hyatt Regency Singapore as well as the International Plaza.

According to realty experts, the selling price for Ascott Raffles Place Singapore is 64.3% more than its estimated valuation at the end of last year.

Ascott Reit is expected to pocket a gain of nearly S$134 million factoring all the transaction costs for this property.

There are media reports that several buyers had come up with offers to purchase this property last year. Cushman & Wakefield had recently released the EoI for the sale and it was concluded on January 09.

The 20-storey building enjoys a conserved status and is located at 2 Finlayson Green. The commercial property has 999-year leasehold and was previously known by the name Asia Insurance Building in the past.

According to the 2014 Master Plan it has been zoned commercial. It has 146 serviced apartments with GFA of 168,952 sq ft.

Designed by the noted Ng Keng Siang this Art Deco-style property was completed in 1955 and back then it was taller than any other building in South-East Asia.

Mr Cheong the buyer has been in the realty business for long and had developed Robinson Road’s Robinson Suites and also owned 137 & 139 Cecil Street in the past.

When Mr Shaun Po, Cushman & Wakefield’s Executive Director of Capital Markets was asked regarding Mr Cheong’s plans with the building post acquisition he said that Ascott shall continue managing it as this was a part of a long-term investment for Mr Cheong.

Regional General Manager, The Ascott Ltd which sponsors Reit, Mr Ervin Yeo that they are actively discussing the future plans for the Ascott Raffles Place Singapore with the new owner and are likely to come up with a new plan in coming days.

Ascott Reit Upcoming New Development

The Ascott Reit has been working with the Qatar Investment Authority with its serviced residence global fund and has become part of a project Funan Integrated Development. By the third quarter of 2019, lyf Funan Singapore would open.

They are also part of a 299-unit serviced residence at CapitaSpring Integrated Development. The new development is coming on a Central Business District site which housed erstwhile Golden Shoe Car Park. The Ascott will look over management of this site and this is expected to open by 2021.

Ascott Reit is expected to use the sale proceeds to close some debts and also use this for potential acquisition or even use them to meet other corporate requirements.

This was stated to the Singapore Exchange during filing by Ascott Reit’s official. The official also added that Ascott Raffles Place accounted for merely 3% of the gross profit for Ascott Reit for the quarter ending September 30, 2018.

The sale isn’t likely to make any change in the financial performance of Ascott Reit.

CEO of Ascott Reit, Beh Siew Kim said in an official statement that the sale would give the company much needed financial flexibility and allow it to recycle its capital to be invested in properties that enjoy a higher-yield.

He added that the company may also try and reduce some of its debt which will increase its headroom for mortgage when it comes to acquiring assets in the future and also develop new assets such as lyf One-North Singapore that would enhance its portfolio.

The announcement didn’t have any impact on Ascott Reit in the market as it closed at S$1.10 unchanged from the previous day.

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