Ascott Divests Stake In Bangkok Serviced Residence, In Line With Asset-Light Strategy
Singapore, June 15 2004 - The Ascott Group has divested its interest in Somerset Lake Point, a 350-unit serviced residence in Bangkok's Sukhumvit district. The company expects to recognise a gain of THB 99 million (S$4.2 million) from the sale.
Ascott's stake in the property is held through its 30 per cent equity in IP Thai Property Fund, which owns the residence. The remaining 70 per cent interest in the fund is held by I.P. Property Fund Asia Limited (IPPFAL). Ascott's parent company, CapitaLand Limited, owns 20 per cent of IPPFAL.
All units in IP Thai Property Fund, which owns Somerset Lake Point, have been sold to the Thailand Government Pension Fund for THB 1,825 million (S$76.7 million).
The sale was completed today (June 15) and Ascott's share of the proceeds is THB 548 million (S$23.0 million). It will continue to manage the serviced residence after the sale.
Ascott is a leading international serviced residence company with 13,800 serviced residence units 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.
Mr Liew Mun Leong, Ascott's deputy chairman, and president and CEO of its parent company CapitaLand Limited, said: "The sale is in line with Ascott's strategy to refine its asset structure and increase its fee-based income. The sale proceeds will be reinvested to grow the serviced residence business and entrench Ascott's position as a market leader in Asia Pacific and Europe. The group enjoys strong brand recognition in Thailand and plans to grow its presence there further."
Mr Eugene Lai, Ascott's chief executive officer, said: "We are looking at securing more serviced residence management contracts, and recently soft opened the 177-unit luxury-tier The Ascott Sathorn at Sathorn Road in the CBD.
"We are optimistic about Bangkok's upper-tier serviced residence market. We expect demand to be sustained by Thailand's good GDP growth, which is forecast at 7.7 per cent this year and 6.5 per cent next year, and healthy foreign direct investment, forecast at US$3.3 billion next year."
He added: "Somerset Lake Point's profile today as a prime investment property reflects Ascott's value-add in growing the residence' reputation, profitability, and substantial base of multinational customers since it opened in 2000."
Mr Lai added that in line with its goal to be a leading global serviced residence company, Ascott's recent strategic moves have included acquiring the remaining 50 per cent stake in the Citadines European serviced residence chain two weeks ago (June 1) for Euro 74.3 million (S$154.2 million).
He said that with full ownership of Citadines, the group 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.
Later, the group plans to restructure its stake in Citadines, divesting part of its interest to strategic and financial partners, while continuing to manage the chain.
Last week (June 7), the group divested its Scotts Shopping Centre and The Ascott Singapore serviced residence for S$345 million, making an estimated net gain of S$29.5 million. It said the proceeds will be used to reduce debt and fund its serviced residence growth in various markets including Europe, China and Japan.
Last month (May), Ascott announced a marketing alliance with the serviced residence arm of Equity Residential, the largest publicly-traded apartment company in the US, to provide serviced apartments throughout the US.
Somerset Lake Point
The twin-tower Somerset Lake Point is at Sukhumvit Road, opposite the Queen Sirikit National Convention Centre, and near major shopping malls, restaurants and entertainment spots.
Facilities include swimming pools, restaurants, a business centre and children's play areas. Units range from stylish studio to three-bedroom suites with broadband internet access, home entertainment systems with cable TV, and fully-equipped kitchens.
In Bangkok, Ascott also operates the 152-unit Somerset Suwan Park View in the CBD, and 127-unit Omni Tower at Sukhumvit Road.
The divestment is expected to increase Ascott's earnings per share by 0.26 Singapore cents for the current financial year ending December 31, 2004. Its net tangible assets per share will also increase by 0.26 Singapore cents.
ABOUT THE ASCOTT GROUPThe Ascott Group is a leading international serviced residence company with 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 marketing alliance with Equity Corporate Housing, the group also offers upper-tier serviced apartments throughout the US. Headquartered in Singapore, The Ascott Group pioneered the 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 at 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 Asia's largest listed property companies. 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.