Ascott REIT: ART is divesting Country Woods in Jakarta for S$33.9, which is 60% above the property’s valuation as at June 2010 and implies an exit yield of 2.9%. Country Woods was sold in a competitive bidding process to an unrelated party. It was understood that ART is divesting this aging property as it has reached the limit in its growth potential in view of its positioning as a rental house amidst the intense competition in South Jakarta.
As Indonesia accounts for just 7% of ART’s total gross profit, the impact of the divestment on its income is insignificant. Post-divestment, Indonesia’s share of total asset value and gross profit is 4% and 6% respectively. The Group’s NAV will inch up to $1.39. Net proceeds of $28.8m are likely to be used to partially fund future acquisitions. The management continues to target Vietnam, India, China and Singapore for potential acquisitions. KE maintains BUY call with TP of 1.35.
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