Singapore-based CapitaLand Ascott Real Estate Investment Trust has sold two hotels in Sydney, Australia, for a combined price of 109 million Australian dollars ($71 million), according to a company news release.

The hotels are the 196-room Courtyard by Marriott Sydney-North Ryde, which opened in 2004, and the 194-room Novotel Sydney Paramatta, a property managed by French hotel firm Accor.

The name of the buyer has not been released. Various news outlets in Australia have reported the buyer is Silversea Investments.

The release stated that the hotels “will be divested at about 5% above book value” with net proceeds of roughly 98 million Australian dollars ($63.7 million).

“The exit yield is 4.4%, and [CapitaLand Ascott] will recognize a net gain of” 14.2 million Australian dollars ($9.2 million), the release states.

According to CapitaLand’s website, the Courtyard by Marriott’s latest valuation on Dec. 31, 2022, was 49.8 million Australian dollars, and the Novotel’s latest valuation, on the same date, was 44.1 million Australian dollars.

Both are freehold properties.

The deal is due to be completed in two stages, with the Courtyard by Marriott hotel completed in the first quarter of 2024 and the Novotel completed in the third quarter.

Executives at the Singapore-based company said the sale came about due to its strategy of focusing on hotels providing higher yields.

“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. The exit yield is also at an attractive level that compares favorably against the current cost of borrowing in Australia,” Serena Teo, CEO of CapitaLand Ascott Trust Management and CapitaLand Ascott Business Trust Management, said in the news release.

The two hotels are similar in room count, size, age and segmentation.

According to CoStar data, the Courtyard by Marriott has nine floors and a gross building area of 79,621 square feet, while the Novotel, which opened in 1992 in a building dating to 1973, has 12 floors and a gross building area of 78,813 square feet.

The Novotel was renovated in 2019.

Teo said one of CapitaLand’s Australian hotels to benefit from this new injection of capital is the Novotel Sydney Central.

The news release notes the hotel “will undergo an extensive [renovation that] includes a brownfield extension to add eight more floors and 72 more rooms, a 28% increase from the current inventory. The property’s gross floor area will also expand by 10%.”

The work is expected to increase the property’s value by about 173.3 million Australian dollars ($112.7 million).

CapitaLand has 12 hotels and serviced residence properties remaining in its Australia portfolio. The company notes it has a global portfolio of 103 properties across 15 countries before the latest sales.

In its latest earnings report, for the half year 2023, CapitaLand posted a gross profit for 154.4 million Singapore dollars ($114 million), up 31% year over year, and an increase of 30% in revenue for the same period.

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