ASCOT sees saturation in the condominium market

Asian Cotton Mills Ltd (ASCOT) is in the process of converting itself into an investment holding company but has decided against more apartment development due to saturation in the condominium market.

“We are seeking to realise the maximum value from our asset base, and are considering options to redeploy part of our assets in other business in order to generate higher returns for our shareholders,” Vijaya Malalasekera, Chairman, ASCOT has said in the annual report of the company.

The company has decided against developing its entire property at Mount Lavinia mainly due to signs of saturation on the condominium market. “Recognising the significant investment implications of development, we instead sought bids for the sale of part of the property,” he has said adding that ASCOT sold six acres of the land to Equity Developers (Private) Ltd, a subsidiary of conglomerate Carson Cumberbatch & Company, for Rs.530,000 per perch. He has further said that the final payment of the total of Rs. 508.8 million permitted the company to report a book profit of approximately Rs. 366.1 million on the transaction.

He has said that notwithstanding the recent uncertainty in the country’s debt and equity markets, the company anticipates that attractive risk-adjusted capital market investment opportunities are likely to arise in the future, and are continuously on the look out for portfolio investment opportunities. He has expressed confidence that the recurrent rental income of ACSOT Developments (Pvt) Ltd (ADPL), which is constructing a 100,000 square foot commercial building to be completed by early next year (of which ASCOT has 60 percent shareholding), will provide a satisfactory return on the investment of Rs.120 million.

He has noted that the company has benefited from a non-cash write-off loan of Rs.121.8 million in the first half of the year, together with the release of all mortgages held over its assets, following the relief granted to all Textile Debt Recovery Fund (TDRF) loan recipients.

He has said that the retained land of approximately two acres at the former premises in Mount Lavinia will also seek further land acquisition opportunities on a selective basis to build a land bank.

The company’s share price gained 22 percent during the past year, broadly on par with the 23 percent rise in the All share Index.