13 Dec
2005

Ascott consolidates leadership position in China - Beijing and Suzhou - through share acquisition and management contract

In line with The Ascott Group’s (Ascott) “asset right” strategy and its growth plan for China, the company has acquired the remaining 70% stake in The Ascott Beijing from Reco Meadow Pte Ltd, and also secured a management contract from Suzhou Magna Property Development Co Ltd for a 225-unit serviced residence in Suzhou. These developments reinforce Ascott’s strategy for managing its portfolio and growing its fee-based income from management contracts.

Ascott acquired the remaining 70% stake in The Ascott Beijing from Reco Meadow Pte Ltd, an affiliate company of GIC Real Estate for a net cash consideration of US$9.2m (S$15.6m) through Hemliner Pte Ltd, the Singapore holding company of the property. With the acquisition of the shares of Hemliner, Ascott will be assuming the company’s bank debt, shareholder’s loans and net current assets.

The acquisition brings Ascott’s total interest in The Ascott Beijing to 100%, following its initial equity stake of 30% in 2001. The acquisition is expected to be completed by the end of 2005, the full ownership of the property will enable Ascott to further enhance its value. The Ascott Beijing with its established brand name and prime location in Chaoyang central business district is set to capitalise on Beijing’s continued economic growth which is expected to be sustained beyond the 2008 Olympic Games.

The management contract that Ascott secured from Suzhou Magna Property Development Co Ltd is for a 225-unit serviced residence in Suzhou. The contract is valid for a period of five years with an option for Ascott to renew the contract for another five years.

The new property to be managed by Ascott, Citadines Emerald City will be Ascott’s third Citadines property in China; the other two being Citadines Jinqiao in Shanghai and Citadines Chongrui in Suzhou. Both properties are slated to be opened in 2006. Citadines Emerald City, a green-field project currently under design development, is targeted for soft opening in the second half of 2007. When completed, the property will feature studio apartments, as well as one and two bedroom units.

Ascott’s Chief Executive Officer, Mr Cameron Ong said: “The acquisition of The Ascott Beijing as well as our efforts to grow our portfolio of management contracts and introduce more Citadines properties in China are in line with Ascott’s ‘asset right’ strategy, and our plan to entrench our presence in one of Asia’s fastest growing economies.”

“Raising our equity stakes in the ‘right’ properties and securing new management contracts are part of Ascott’s strategy for managing its portfolio and growing its fee-based income from management contracts. Through our three brand names, The Ascott, Somerset and Citadines, Ascott’s presence in China will be anchored by its dominant share in all market segments in the major and secondary cities of China,” added Mr Ong.

The Ascott Beijing – Beijing
The Ascott Beijing is Beijing’s largest top-end serviced residence. The 272-unit twin tower building in the Chaoyang central business district is close to top-tier office buildings including The Exchange Beijing office tower, China World Trade Centre and International Exhibition Centre. The locality is also well-supported by a comprehensive range of business, retail and recreational facilities.

According to Beijing Statistical Yearbook 2005, the overall economy in Beijing has been growing steadily over the years. Since 2000, Beijing’s Gross Domestic Product (GDP) has been growing at over 10% each year. As at the end of 2004, Beijing’s GDP reached RMB428 billion (US$53 billion), representing a 13.2% growth over 2003.

The capital of the People’s Republic of China, Beijing is the country’s centre of political, cultural and international exchange activities. The city is host to 137 embassies, representative offices of 17 international and regional organizations, and bureau of 190 foreign news organizations. These numbers are expected to grow in tandem with the level of foreign investments and number of multinational companies that the capital attracts given its impressive GDP growth and its position as a major gateway into the rest of the country.

Citadines Emerald City – Suzhou
Citadines Emerald City will be located in the popular Suzhou Emerald City, an integrated property development comprising retail, commercial, and travel accommodation. Suzhou Emerald City is situated at Suzhou National New & Hi-Tech Industrial Development Zone in Suzhou New District (SND), and it is slated to be an entertainment and business hub.

SND has been designed and developed with the aim of attracting environmental protection technology and export-oriented manufacturing companies, Research & Development institutions, as well as other high-technology firms to set up offices there. Currently over 40 Fortune 500 companies including Motorola, DuPont, Siemens, Philips, Mitsui Sumitomo Bank, Epson and Matsushita have set up offices there.

Ascott currently has more than 2,400 serviced residence units in 12 properties in China. Out of these, five properties are partially or fully owned by Ascott, while the rest are under management contracts. By 2010, Ascott targets to more than double the number of units in China to over 5,000.

The management contract for Citadines Emerald City is not expected to have any material impact on the Ascott’s financial results for the current financial year. For more details on the acquisition of The Ascott Beijing, please refer to the attached SGX announcement.

About The Ascott Group

The Ascott Group is a leading international serviced residence company with 15,000 serviced residence units in the key cities of Europe, Asia Pacific, and the Gulf region.

Ascott's global presence spans 40 cities in 17 countries. These include London, Paris, Brussels, Berlin and Barcelona in Europe; Singapore, Bangkok, Hanoi, Kuala Lumpur, Tokyo, Seoul, Shanghai and Beijing in Asia; as well as Sydney, Melbourne and Auckland in Australia/New Zealand.

Headquartered in Singapore, The Ascott Group pioneered Asia Pacific's first branded luxury serviced residence in 1984. Today, it boasts a 21-year industry track record and serviced residence brands that enjoy recognition worldwide.

The Group operates three brands – The Ascott, Somerset and Citadines. Its achievements have been recognised internationally; it has clinched numerous prestigious awards including ‘Best Accommodation’ by The Ascott Metropolis Auckland in the 2005 World Travel Awards, TTG Asia Media’s Best Serviced Residence Operator award and the Business Traveller’s 2005 Best Serviced Residence Brand and Best Serviced Residence in Asia Pacific awards. For a full list of these awards, please visit : https://www.the-ascott.com/aboutus/awards_and_accolades.html?year=2007

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, the multinational company's core businesses in property, hospitality and real estate financial services are focused in gateway cities in Asia, Australia, Europe and the Gulf region. Its property and hospitality portfolio spans more than 70 cities in 17 countries.

For reservations on Ascott properties, call Central Reservations on (65) 6272-7272 or visit www.the-ascott.com

About Reco Meadow Pte Ltd

Reco Meadow Pte Ltd is an affiliate company of GIC Real Estate, the real estate investment arm of the Government of Singapore Investment Corporation (GIC), which manages the foreign reserves of Singapore. GIC Real Estate invests in real estate-related assets outside of Singapore, covering all property sectors (including office, retail, industrial, hotel or residential assets) and product types, ranging from direct building acquisitions, property investment funds to strategic stakes in publicly-listed property companies, joint ventures and real estate debt.