The transaction for Courtyard by Marriott Sydney-North Ryde is expected to conclude in the first quarter of 2024. Credit: © 2023 CapitaLand.

CapitaLand Ascott Trust (CLAS) has announced plans to divest two hotels in Sydney, Australia, to an independent third party for a combined amount of A$109m ($70.1m).

The sale of these two properties, which are Courtyard by Marriott Sydney-North Ryde and Novotel Sydney Paramatta, is anticipated to be approximately 5% higher than the book value, with net proceeds expected to be A$98m ($63.01m).

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The transaction for Courtyard by Marriott Sydney-North Ryde is expected to conclude in the first quarter of 2024.

Meanwhile, the divestment of Novotel Sydney Paramatta is anticipated to be completed in the third quarter of next year.

CLAS and CapitaLand Ascott Business Trust Management CEO Serena Teo said: “The divestment of these two properties outside of central Sydney is part of our active portfolio reconstitution strategy. CLAS remains focused on assets that offer better yields and will further uplift the value for our portfolio.

“As additional capital will be required to upgrade these two mature properties, the divestment will enable us to redeploy the proceeds into more optimal uses, such as but not limited to paying down debt and funding our other asset enhancement initiatives (AEI).”

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CLAS will still have 12 serviced residences and hotels in cities across Australia, following the sale of Courtyard by Marriott Sydney North-Ryde and Novotel Sydney Paramatta.

Novotel Sydney Central is one of eight properties in the CLAS’ AEI pipeline that would create increased value for Stapled Securityholders.

The hotel is set to undergo an extensive AEI that would see the addition of eight floors and 72 more rooms, resulting in a 28% increase in capacity.

The gross floor area of the property will also increase by 10%.