Ascott Acquires Remaining Stake in Citadines Serviced Apartment Chain in Europe
The Ascott Group, an international serviced residence company, has exercised its call option to acquire the remaining 50 per cent interest in Citadines, a pan-European serviced apartment chain.
The acquisition brings Ascott’s total interest in Citadines to 100 per cent, following its initial acquisition of a 50 per cent stake of the European chain in February 2003.
Ascott will pay Euro 74.3 million (about S$154.2 million) for the latest 50 per cent stake. The acquisition price is based on a gross enterprise value of Euro 190.7 million (about S$395.7 million) for 50 per cent of the Citadines group. This represents a reduction of Euro 10 million (about S$20.8 million) compared to the gross enterprise value for 50 per cent of the initial acquisition.
The acquisition is subject to the clearance of the relevant competition authorities and is expected to complete by the fourth quarter this year.
Citadines operates over 5,100 serviced apartments in major European cities such as Paris, London, Brussels, Barcelona and Berlin. With the Citadines portfolio, Ascott has over 13,800 serviced apartments in 39 cities in Europe and Asia Pacific. It is the serviced residence arm of CapitaLand Limited, one of Asia’s largest listed property companies.
Significant Platform for Expansion in Europe
The Ascott Group’s chairman, Mr Lim Chin Beng, said: "Citadines has enabled Ascott to redefine the business of providing serviced apartments around the world. The latest Citadines acquisition is a strategic move towards Ascott’s goals to be a leading international serviced residence company, create a stronger global business platform and drive higher returns. It follows Ascott’s recent asset restructuring activities and marketing alliance with Equity Corporate Housing to offer serviced apartments in the US."
Mr Liew Mun Leong, Ascott’s deputy chairman, and president and CEO of its parent company, CapitaLand Limited, said: "The Citadines acquisition is a major expansion initiative. It has given Ascott a substantial leap in global coverage, with a ready and profitable operational infrastructure across 18 cities in Europe, and access to the continent’s key serviced residence markets. Citadines is earnings accretive and has provided Ascott with a stronger platform for future growth.
"By acquiring the remaining stake, Ascott will be able to fully integrate the European chain with the rest of its operations to achieve greater economies of scale. It will also be able to leverage a combined larger customer base to cross-sell and accelerate sales growth. Citadines is expected to contribute significantly to the group’s profitability, going forward."
Positive Outlook for European Hospitality Industry
Mr Eugene Lai, Ascott’s chief executive officer, said: "Ascott was able to negotiate a price reduction of Euro 10 million (about S$20.8 million) compared to the previous acquisition, based on the lower performance of the European hospitality industry last year due to the Iraq war.
"We have proceeded to acquire the rest of Citadines as it is a good business and the European hospitality market is forecast to recover this year. Citadines’ performance is expected to improve on the back of the market recovery."
He added that last year, Citadines’ occupancies remained resilient at over 70 per cent, despite difficult market conditions. Its revpar dipped only five per cent, compared to deeper 10 to 15 per cent revpar falls for the overall European hospitality industry.
Mr Lai said: "We plan to later restructure our stake in Citadines, divesting part of our interest to strategic and financial partners. We will remain a minority partner and continue to manage the serviced residence chain. The divestment proceeds will be used to fund further growth, including in more European cities, as we pursue improved returns through a mix of management contracts and equity participation."
Mr Lai said that Ascott plans to roll out the mid-tier Citadines brand to markets beyond Europe, such as China. The Citadines marque complements the group’s The Ascott and Somerset brands which serve the luxury and upper-tier serviced residence segments.
Last month (May), Ascott announced its marketing alliance with the serviced residence arm of Equity Residential, the US’ largest listed apartment company, to provide serviced apartments in the US, in addition to its residences in Europe and Asia Pacific.
Based on Ascott's financial statements for 2003, and assuming that the call option acquisition was effected at the beginning of 2003, Ascott's earnings per share at the end of last year would have increased from 1.19 Singapore cents to 1.46 Singapore cents. The financial impact on its net tangible assets per share would not have been material.
About The Ascott Group
The Ascott Group is a leading international serviced residence company with over 13,800 serviced residence units in the key cities of Europe and Asia Pacific.
Ascott's global presence spans 39 cities in 16 countries. These include London, Paris, Brussels, Berlin and Barcelona in Europe; Singapore, Bangkok, Hanoi, Kuala Lumpur, Tokyo, Shanghai and Beijing in Asia; Sydney, Melbourne and Auckland in Australia and New Zealand; and Dubai in the Gulf region.
Through its alliance with Equity Corporate Housing, the group also offers upper-tier serviced apartments throughout the US.
Headquartered in Singapore, The Ascott Group pioneered Asia Pacific’s first branded luxury serviced residence in 1984. Today, it boasts a 20-year industry track record and serviced residence brands that enjoy recognition worldwide.
The group’s flagship The Ascott luxury serviced residence brand projects an elegant lifestyle appealing to top executives. Its Somerset upper-tier brand offers stylish, contemporary living for senior to upper management executives. The mid-tier Oakford brand in Australia and Citadines brand in Europe provide corporate executives with comfortable city residences.
Recent awards the group has clinched include the Number One position in the 2004 China’s Top 100 Serviced Residences ranking for its eight properties in China, 2004 Best Service in Serviced Apartments awards in Hanoi and Ho Chi Minh City, and Best Annual Report and Best Operating and Financial Review awards in Singapore’s 2004 Annual Report Awards.
Listed on the mainboard of the Singapore Exchange, Ascott is the serviced residence arm of CapitaLand Limited, one of the largest listed property companies in Asia. Headquartered in Singapore, CapitaLand’s core businesses in property, hospitality, property services and real estate financial services are focused in gateway cities in Asia, Australia and Europe. The company's hospitality businesses in hotels and serviced residences span more than 60 cities around the world.
For reservations on Ascott properties, call Central Reservations on (65) 6272-7272 or visit www.the-ascott.com.