Ascott REIT's property in Singapore, Ascott Raffles Place. (Photo: REITsWeek)

OCBC Investment Research has maintained a ‘Hold’ rating on Singapore-listed Ascott REIT after the latter disclosed plans to divest its beneficiary interests in 18 rental housing properties in Tokyo, Japan.

The interests will be disposed for about SGD153.6 million (USD110 million), or about 16.1% above the valuation of the properties as at 31 December 2016, the hospitality REIT announced earlier in the month.

Estimated gain from the divestment, which is scheduled to complete in the second quarter of 2017, is expected to be about SGD10.6 million.

“We note that the net sale proceeds may be used for asset enhancement, funding potential acquisitions and/or other general corporate purposes”, said OCBC Investment Research in a note released on 17 April.

“We deem the transaction positive given that the properties are more than ten years old and due for asset enhancement”, the firm added, maintaining a fair value estimate of SGD1.105 on the REIT.

Units of Ascott REIT last changed hands on the Singapore Exchange at SGD1.095.

By Ridzwan Rahmat

Ridzwan has been analysing REITs and business trusts since 2008, and personally manages a portfolio comprising mainly of SGX-listed REITs. He founded REITsWeek in 2013.