SINGAPORE (Jan 22): The manager of Ascott Residence Trust (Ascott REIT) has filed a clarification letter to the Singapore Exchange (SGX) in response to a letter published in the forum of The Straits Times on Monday, which questioned the gap between the valuation and buyout amount of Ascott Raffles Place.
To recap, Ascott Raffles Place is being sold to a private investor at a consideration of $353.3 million, which represents a 64.3% premium over its independent valuation of $215 million as at Dec 31.
In the published letter, Straits Times reader Tan Chor Yong took issue with the valuation discrepancy, which he claims to be “a serious red flag that something is amiss in the [divestment] process”.
He also urged relevant authorities to launch an investigation into the matter.
In response dated Jan 22, Ascott REIT’s manager explains that its asset’s valuation was conducted as part of the REIT’s annual valuation exercise for its entire portfolio.
Located at 2 Finlayson Green, the 20-storey conserved building has a 999-year lease with 146 serviced apartments.
The valuation exercise was undertaken by independent valuer Colliers International using the discounted cashflow method, which is consistently applied by Ascott REIT and generally in line with market practices.
With regards to the sale, Ascott REIT’s manager says Ascott Raffles Place’s $353.3 million sale price reflects the highest offer received during a marketing exercise conducted by independent property consultant, Cushman & Wakefield.
Lastly, the manager reiterates that the sale was to an “unrelated third party” who, on a separate note, is rumoured to be investor Cheong Sim Lam. Cheong’s family previously developed International Plaza and the Hyatt Regency Singapore.
“The manager wishes to clarify that all divestments are carefully considered by the manager, and the divestment of Ascott Raffles Place Singapore was approved by the board of directors in accordance with the applicable legal and regulatory legal requirements,” it concludes.
Units in Ascott REIT are trading flat at $1.15 as at 11.22pm.
