Ascott Residence Trust (ART) announced that it has entered into a conditional sale and purchase agreement with Samty Co., an unrelated third party, to divest six of its rental housing properties in Japan. The total divestment amount works out to JPY4.48b (~S$52.6m), and comes at a 12.5% premium to the properties’ independent valuation of JPY3.98b (~S$43.3m), as at 30 Jun 2015.

ART has agreed to sell the properties as part of its capital recycling strategy, coupled with the fact that the assets are more than 10 years old and are located in regional cities of Japan where there is limited upside potential. Given the relatively small contribution of these assets to ART’s overall portfolio (~0.99% of its total gross rental income for FY14), we maintain our BUY rating and S$1.44 fair value estimate on the stock.

Source: OCBC Research - 4 Sep 2015