Ascott To Double The Asset Size Of Ascott Residence Trust To S$2.85 Billion
Divests 28 properties in Europe and Asia to Ascott Reit for a sale consideration of S$969.6 million (1)
Acquires Ascott Beijing for future strata-title sale
Singapore, 20 August 2010 – CapitaLand’s wholly-owned serviced residence business unit, The Ascott Limited (Ascott), has through its subsidiaries entered into conditional sale and purchase agreements to divest 28 of its serviced residence properties to Ascott Residence Trust (Ascott Reit) for a sale consideration of S$969.6 million. The divestment consists of 26 serviced residences in Europe and one property each in Singapore and Vietnam. Ascott is expected to realise a net gain of approximately S$52.1 million(2) from the divestments. This is in line with Ascott’s strategy to recycle capital for investment opportunities. At the same time, Ascott will purchase Ascott Reit’s entire interest in Ascott Beijing, a premium serviced residence property, for S$214.0 million(3) and will enhance and re-position the property for future strata-title sale.
Mr Lim Chin Beng, Chairman of The Ascott Limited said: “This is an important milestone for Ascott as it continues to extend its leadership as the world's largest international serviced residence owner-operator. We will leverage on this opportunity to reconstitute Ascott’s portfolio and inject quality stabilised assets into Ascott Reit, which is in line with our capital recycling strategy. It is also consistent with CapitaLand’s business model of holding stabilised income-producing assets in REITs. At the same time, these transactions will almost double Ascott Reit’s asset size to S$2.85 billion, transforming the Reit into a bigger and stronger platform to complement Ascott’s global growth strategy. Ascott will not only benefit from the divestment gains but will continue to earn fees from operating the properties and managing the Reit. Since Ascott will maintain its 47.7% share in Ascott Reit, it will also continue to earn distribution income from the Reit.”
The divestment of the European properties will transform Ascott Reit from a Pan-Asian into an international REIT and catapult it from being the 12th largest to the 6th largest S-REIT by asset size. Ascott Reit’s right of first refusal will expand to include properties in Europe and will thus increase its pipeline of properties. Ascott Reit currently has the right of first refusal to acquire Ascott’s operating serviced residences in the Pan-Asian region before Ascott divests them to a third party.
Mr Lim Ming Yan, Chief Executive Officer, The Ascott Limited said: “These proposed transactions are an important part of the transformation of Ascott. Besides strengthening and transforming Ascott Reit, the sale consideration of about S$970 million will also provide Ascott the financial capacity to capture new opportunities in Asia and Europe. In addition to our key markets like China, Singapore, Vietnam and India, we are also seeing attractive investment prospects in Paris, London and key cities in Germany.”
Mr Lim Ming Yan added: “After the divestment, Ascott will continue to operate the 28 properties which is consistent with our plan to scale up to 40,000 apartment units by 2015. Having significant scale will enable us to further enhance our award-winning hospitality through upgrading our people, hospitality management systems and properties.”
The 28 properties with 3,347 apartment units which Ascott is divesting to Ascott Reit are located in Paris and the regional cities of France; London, the United Kingdom; Brussels, Belgium; Berlin and Munich, Germany; and Barcelona, Spain; while the Asian properties are Citadines Singapore Mount Sophia and Somerset Hoa Binh in Hanoi. Currently, Ascott has a total of 47 properties with over 5,200 apartment units in Europe, nine properties with over 900 units in Singapore, eight properties with over 1,300 units in Vietnam and 33 properties with over 6,300 units in China.
The acquisition and divestments are inter-conditional upon the other being completed such that if any of the acquisition or the divestments is not completed, neither transaction will take place.
About The Ascott Limited
The Ascott Limited is the world's largest international serviced residence owner-operator with over 20,000 operating serviced residence units in key cities of Asia Pacific, Europe and the Gulf region, as well as over 6,000 units which are under development, making a total of more than 26,000 units.
The company operates three brands – Ascott, Somerset and Citadines. Its portfolio spans over 70 cities across more than 20 countries, 14 of which are new cities in Ascott's portfolio where its serviced residences are being developed.
Ascott, a wholly-owned subsidiary of CapitaLand Limited, is headquartered in Singapore. It pioneered Asia Pacific's first international-class serviced residence in 1984. It also established the world’s first Pan-Asian serviced residence real estate investment trust, Ascott Residence Trust, in 2006. Today, the company boasts a 26-year industry track record and serviced residence brands that enjoy recognition worldwide.
Recent awards include TTG China Travel Awards 2010 ‘Best Serviced Residence Operator in China’, DestinAsian Readers’ Choice Awards 2010 ‘Best Serviced Residence in Asia Pacific’, TTG Travel Awards 2009 ‘Best Serviced Residence Operator’, Business Traveller UK Awards 2009 ‘Best Serviced Apartment Company’ and Business Traveller Asia Pacific Awards 2009 ‘Best Serviced Residence Brand’ and ‘Best Serviced Residence in Asia Pacific’.
About CapitaLand Group
CapitaLand is one of Asia’s largest real estate companies. Headquartered and listed in Singapore, the multi-local company's core businesses in real estate, hospitality and real estate financial services are focused in growth cities in Asia Pacific and Europe.
The company's real estate and hospitality portfolio, which includes homes, offices, shopping malls, serviced residences and mixed developments, spans more than 110 cities in over 20 countries. CapitaLand also leverages on its significant asset base, real estate domain knowledge, financial skills and extensive market network to develop real estate financial products and services in Singapore and the region.
The listed entities in the CapitaLand Group include Australand, CapitaMalls Asia, CapitaMall Trust, CapitaCommercial Trust, Ascott Residence Trust, CapitaRetail China Trust, CapitaMalls Malaysia Trust and Quill Capita Trust.
About Ascott Residence Trust
Ascott Residence Trust (Ascott Reit) is the first Pan-Asian serviced residence real estate investment trust established with the objective of investing primarily in real estate and real estate-related assets which are income-producing and which are used or predominantly used, as serviced residences or rental housing properties.
The Ascott Limited launched Ascott Reit in 2006. Comprising an initial asset portfolio of 12 strategically located properties in seven Pan-Asian cities, Ascott Reit was listed with an asset size of about S$856 million. With the completion of the acquisition and divestment, Ascott Reit’s portfolio will expand to S$2.85 billion, comprising 65 properties with 6,681 units in 23 cities across 12 countries across Asia Pacific and Europe.
Ascott Reit is managed by Ascott Residence Trust Management Limited, a wholly-owned subsidiary of Ascott and an indirect wholly-owned subsidiary of CapitaLand, one of Asia’s largest real estate companies.
For more information about Ascott Reit, please visit https://www.ascottreit.com.
(1) The enterprise value of the properties is approximately S$1.39 billion. The total sale consideration amounted to S$969.6 million, after deducting assumed bank loans of S$422.1 million, and minority interests of S$3.0 million.
(2) After deferring a part of the gain in proportion to Ascott’s interest in Ascott Reit. Before the deferment, the net gain is approximately S$100.1 million.
(3) The purchase consideration of S$214.0 million for Ascott Beijing was arrived after taking into account the agreed purchase price of S$301.8 million less consolidated net current liabilities of S$14.2 million and aggregate debt of S$73.6 million.