CapitaLand / Ascott Residence Trust

CapitaLand / Ascott Residence Trust (ART): CapitaLand said it will buy a Spore property, Somerset Grand Cairnhill, from ART for $359m and sell it back after redeveloping it into a hotel and residential complex. CapitaLand's units will develop the site, located in Orchard Road area, and divest it to ART for $405m in 2017. As part of the deal, CapitaLand will also divest one property in Spore, Ascott Raffles Place, and one in Guangzhou to Ascott Reit for $283.3m. CapitaLand, which has a 49% equity stake in ART, is expected to recognize an estimated net profit of $98.9m in 2012 from the transactions. The deal is a part of CapitaLand's "capital recycling strategy" and will provide the group with additional capital for future investments. CIMB says the move isn't a surprise; adds the REITs that CapitaLand has stakes in act as a vehicle for them to recycle and an outlet for them to monetize gains. Says, Raffles Place is a mature asset, allowing ART to gain good recurring yields going forward given the maturity of the asset; notes Somerset Grand Cairnhill is underutilized.