Ascott to launch Ascott Residence Trust (ART) – The first Pan-Asian serviced residence REIT
ART’s initial portfolio comprises 12 Pan-Asian properties valued at S$856 million
The Ascott Group (Ascott) will soon launch the first Pan-Asian serviced residence real estate investment trust (REIT), named Ascott Residence Trust (ART). ART’s initial portfolio valued at S$856 million comprises 12 of Ascott’s serviced residences strategically located in key high-growth Pan-Asian gateway cities where Ascott has leadership presence. The 12 properties, with a total of 2,068 units, are located in Singapore, China, Indonesia, the Philippines and Vietnam. These countries are enjoying rising gross domestic product (GDP) and foreign direct investments (FDI), two key growth drivers for the serviced residence industry.
ART units will be offered as a preferential offering exclusively to Ascott shareholders at an attractive distribution yield of 9% compared to the S-REIT sector average yield of about 5%. Under this offering to be approved at an Extraordinary General Meeting (EGM), Ascott’s shareholders will have the exclusive opportunity to subscribe up to 75% of ART’s units while the remaining units will be held by Ascott. ART’s units will be offered to Ascott’s shareholders at a preferential offer price of S$0.68 per unit which is a significant discount of 48.1% to net asset value per unit of S$1.31.
Under the proposed arrangement, for every 1,000 Ascott shares which a shareholder owns, the shareholder will be entitled to subscribe for 200 ART units at the preferential offer price. If the shareholder takes up this entitlement of ART units, the shareholder will own 1,000 Ascott shares and 200 ART units. Shareholders have several options; they may subscribe for their entitled ART units, apply for additional ART units up to board lots, apply for excess ART units or, cash out their entitlements.
The setting up of ART is a significant and beneficial transformation of Ascott’s business model. Ascott will have an integrated platform; ART will be a capital-efficient, asset-owning vehicle and acquisition platform while Ascott will focus on strengthening the global brand, growing fee-based income, and incubating new serviced residences and rental housing properties. ART has been given the right of first refusal over acquisition of properties owned or to be owned by Ascott in the Pan-Asian region.
ART will focus on delivering stable and growing dividends by acquiring high-yield serviced residences or rental housing properties in the Pan-Asian region. ART will grow its portfolio through acquisition of properties from Ascott and third parties. Ascott’s shareholders who subscribe to ART units will therefore enjoy a stable and growing distribution of profits.
Mr Lim Chin Beng, Chairman of Ascott said: “The setting up of ART is an innovative initiative that will unlock shareholder value and propel Ascott towards its objective of growing its global portfolio from the current 15,500 serviced residence units to 25,000 units by 2010. With an integrated business model, Ascott will also be in a better and stronger position to achieve its next level of growth beyond 2010.”
Said Mr Liew Mun Leong, Ascott’s Deputy Chairman and President and CEO of its parent company, CapitaLand Group: “CapitaLand fully supports the launch of the Ascott Residence Trust or ART. We have given our irrevocable undertaking to vote in favour of this transaction at Ascott’s upcoming EGM and would be subscribing to our full entitlement of the ART units under the preferential offering.”
“For both shareholders of CapitaLand and Ascott, this is yet another move to unlock shareholder value and to improve capital productivity within the CapitaLand Group. We believe that ART will be as successful as our two other REITS, CapitaMall Trust and CapitaCommercial Trust, where unit-holders have enjoyed a stable distribution of profits.”
Ascott’s Managing Director and CEO, Mr Cameron Ong said: “Ascott is committed to bringing enhanced returns to our shareholders and the setting up of ART is another demonstration of our commitment. We are also offering Ascott’s shareholders the exclusive right to buy ART at an attractive yield of 9% at the preferential offer price, which is above the S-REIT market sector average yield of about 5%.”
“We see Asia leading global economic growth. ART is the first of its kind in the Pan-Asian region. With ART’s portfolio comprising prime properties in the region, it is an investment vehicle that is well-positioned to tap on this growth. ART will also be able to capitalise on Ascott’s deep familiarity with the Asian region, its leadership presence and strong network of relationships to identify acquisition opportunities and achieve maximum operating efficiencies for the properties,” added Mr Ong.
About The Ascott Group
The Ascott Group is a leading international serviced residence company with about 15,500 serviced residence units in key cities of Europe, Asia Pacific, and the Middle East.
Ascott's global presence spans over 41 cities in 17 countries. These include London, Paris, Brussels, Berlin and Barcelona in Europe; Singapore, Bangkok, Pattaya, Hanoi, Kuala Lumpur, Tokyo, Seoul, Shanghai and Beijing in Asia; Sydney, Melbourne and Auckland in Australia/New Zealand as well as Dubai in the Middle East.
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 Korea Times’ ‘Best International Brand (Serviced Residence)’ by Somerset Palace Seoul, ‘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 Pacific, Europe and the Middle East. 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