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CapitaLand to redevelop prime Singapore’s Orchard site

July 9, 2012

SINGAPORE: CapitaLand Ltd has entered into a conditional agreement with Ascott Residence Trust (Ascott Reit) to acquire Somerset Grand Cairnhill Singapore located in the heart of Orchard Road for S$359 million.

In a statement, CapitaLand said its wholly-owned subsidiaries, The Ascott Ltd and CapitaLand Residential Singapore Pte Ltd, will jointly redevelop the prime Orchard Road site into CapitaLand’s first integrated development (Cairnhill Development) in Singapore comprising a serviced residence with a hotel licence (New Cairnhill SR) and a high-end residential development.

At the same time, CapitaLand will divest Ascott Raffles Place Singapore and its entire interest in Ascott Guangzhou to Ascott Reit for S$283.3 million.

CapitaLand is expected to recognise an estimated net profit of S$98.9 million in 2012 which comprises about S$51.4 million from the divestments and S$42.7 million from the share of Ascott Reit’s gain from the divestment of Somerset Grand Cairnhill Singapore.

As part of the bundled transactions, CapitaLand will also enter into a conditional agreement to divest the New Cairnhill SR to Ascott Reit for S$405 million.

The property is expected to be delivered to Ascott Reit in 2017, after it is redeveloped.

CapitaLand Group president and CEO Liew Mun Leong said: “The redevelopment of the prime Orchard Road site will give us the opportunity to combine the group’s expertise in serviced residence and residential developments, reflecting our integrated real estate value chain competencies.”

Chong Kee Hiong, CEO of The Ascott Ltd, said: “Through this strategic deal, we can reinvest the capital for Ascott’s growth and further strengthen Ascott Reit’s portfolio in which CapitaLand has a 49% stake.”

He said the proceeds from the divestment of Ascott Raffles Place and Ascott Guangzhou will enable Ascot to acquire and redevelop Somerset Grand Cairnhill into an integrated development with a serviced residence block.

Chong said Ascott will continue to seek investment opportunities and management contracts to achieve its target of 40,000 apartment units globally by 2015.

Ascott will continue to operate the 146-unit Ascott Raffles Place Singapore through a master lease arrangement and the 208-unit Ascott Guangzhou through a pre-existing management agreement.

Through a master lease arrangement, Ascott will also manage the New Cairnhill SR with an expected 371 units based on the current Cairnhill Development plan.

The high-end residential development by CapitaLand will comprise about 200 to 250 units targeting high net-worth individuals, families and young professionals who enjoy living amidst the buzz of Singapore’s renowned shopping belt.

The acquisition of Somerset Grand Cairnhill Singapore, the divestment of Ascott Raffles Place Singapore and Ascott Guangzhou, and the execution of the agreement for the New Cairnhill SR are inter-conditional.

Ascott Reit will seek unitholders’ approval for the transactions at an extraordinary general meeting on July 27, 2012.

The CapitaLand Group’s listed entities include Australand, CapitaMalls Asia, CapitaMall Trust, CapitaCommercial Trust, Ascott Residence Trust, CapitaRetail China Trust, CapitaMalls Malaysia Trust and Quill Capita Trust.

- Bernama


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