Ascott acquires majority stake in Quest apartment hotels for a$180 million to become largest serviced residence provider in Australasia

CapitaLand's wholly owned serviced residence business, The Ascott Limited (Ascott), is acquiring an additional 60% stake in Quest Apartment Hotels (Quest) for A$180 million (S$191 million). This will increase Ascott's stake in Quest from its current 20% to 80%, propelling Ascott to become the largest serviced residence provider in Australasia. With 180 properties located in regional and metropolitan areas across Australia, New Zealand and Fiji, the acquisition will boost Ascott's portfolio by over 11,000 units to more than 67,000 units across 507 properties and 124 cities globally. At the same time, Ascott has the option to acquire the remaining 20% interest in Quest, subject to terms and conditions.

Mr Lee Chee Koon, Ascott's Chief Executive Officer, said: "Increasing our stake in Quest to become its majority shareholder will leapfrog Ascott to become the leading serviced residence provider in Australasia. This acquisition will give Ascott an instant boost of over 11,000 units. Scale is important for us to offer more options to customers, strengthen our sales and distribution, and help speed up Ascott's growth. Besides entrenching Ascott's presence in the developed and stable market of Australia, we will be able to capitalise on the established Quest brand and its highly scalable business format franchise systems and know-how, and further apply the franchise platform as a driver of growth for Ascott."

"Since Ascott's acquisition of a 20% stake in Quest in 2014, Quest's network revenue has seen a healthy annual growth of 6%, resulting in strong annual profit earnings primarily from Quest's recurring fee income. Ascott will enjoy the recurring franchise fees that Quest earns from its franchise properties and enhance the stability of our portfolio income as well as return on equity."

Mr Paul Constantinou, Chairman of Quest Apartment Hotels, said the investment sees Quest joining one of the world's leading serviced residence networks, offering Quest guests the benefit of true global reach across 29 countries in the Americas, Asia Pacific, Europe and the Middle East.

"Quest will now further leverage the strength of Ascott's globally recognised, award-winning brands and fast track its international expansion, whilst maintaining its successful franchise format business, along with the value and integrity of the Quest brand," Mr Constantinou said.

"The company now has the capability to offer customers a true global accommodation solution for both transient and extended stay requirements, and will allow Quest to fast track the growth of the brand as a unique franchising platform into global markets."

In addition, Ascott has acquired its first serviced residence in Brisbane as part of its strategic partnership with Quest. The 100-unit freehold serviced residence to be developed on a turnkey basis is acquired from an unrelated local property developer for A$24 million (S$25 million). It will be named Quest Cannon Hill and operated as a Quest franchise when the property opens in 2018.

Quest Cannon Hill is the second acquisition under Ascott's strategic partnership with Quest. In mid-2016, Ascott acquired the 221-unit Quest NewQuay Docklands in Melbourne for A$71 million (S$71 million). Quest NewQuay Docklands will be Quest's largest property in its network when it opens in 2019.

Mr Lee said: "We first took a 20% stake in Quest a few years back; it gave us time to work together and understand each other's culture and strengths. After due consideration, we decided to take the partnership further with this move. We firmly believe that the synergies of Ascott and Quest will make us more competitive in the serviced residence space. Quest also has a strong talent bench that could contribute to Ascott's global expansion plan."

Mr Lee added: "With Ascott's investment in Quest, we can count on our joint capabilities to tap more pipeline opportunities for turnkey delivery of new-build projects as well as readyoperating properties with incumbent leases in Australasia. The synergies to be realised in the global and national cross-selling network will not only widen Ascott's customer reach in Australasia, Quest's customers will also have access to Ascott's properties globally given the complementary geographical presence. Franchise, management contracts, investments, and strategic alliances will continue to be key strategies to solidify Ascott's lead as we work towards exceeding our target of 80,000 units globally by 2020."

With the addition of Quest Cannon Hill, Ascott currently owns and manages 10 serviced residences with over 1,300 apartment units in Brisbane, Greater Sydney, Hobart, Melbourne and Perth under the Citadines, Somerset and Quest brands. Quest has 180 properties with over 9,000 existing units in Australia, New Zealand and Fiji, and over 2,000 units under construction.

About The Ascott Limited

Since pioneering Asia Pacific's first international-class serviced residence with the opening of The Ascott Singapore in 1984, Ascott has grown to be a trusted hospitality company with more than 940 properties globally. Headquartered in Singapore, Ascott's presence extends across more than 220 cities in over 40 countries in Asia Pacific, Central Asia, Europe, the Middle East, Africa, and the USA.

Ascott's diversified accommodation offerings span serviced residences, co-living properties, hotels and independent senior living apartments, as well as student accommodation and rental housing. Its award-winning hospitality brands include Ascott, Citadines, lyf, Oakwood, Quest, Somerset, The Crest Collection, The Unlimited Collection, Preference, Fox, Harris, POP!, Vertu and Yello; and it has a brand partnership with Domitys. Through Ascott Star Rewards (ASR), Ascott's loyalty programme, members enjoy exclusive privileges and offers at participating properties.

A wholly owned business unit of CapitaLand Investment Limited, Ascott is a leading vertically-integrated lodging operator. Harnessing its extensive network of third-party owners and in-market expertise, Ascott grows fee-related earnings through its hospitality management and investment management capabilities. Ascott also expands its funds under management by growing its sponsored CapitaLand Ascott Trust and private funds.

For more information on Ascott's industry record of 40 years and its sustainability programme, please visit www.discoverasr.com/the-ascott-limited. Connect with us on Facebook, Instagram, TikTok and LinkedIn.

About CapitaLand Investment Limited

Headquartered and listed in Singapore, CapitaLand Investment Limited (CLI) is a leading global real estate investment manager (REIM) with a strong Asia foothold. As at 30 September 2023, CLI had S$133 billion of real estate assets under management, and S$90 billion of real estate funds under management (FUM) held via six listed real estate investment trusts and business trusts, and more than 30 private vehicles across Asia Pacific, Europe and USA. Its diversified real estate asset classes cover retail, office, lodging, business parks, industrial, logistics and data centres.

CLI aims to scale its FUM and fee-related earnings through fund management, lodging management and its full stack of operating capabilities, and maintain effective capital management. As the investment management arm of CapitaLand Group, CLI has access to the development capabilities of and pipeline investment opportunities from CapitaLand's development arm.

As a responsible company, CLI places sustainability at the core of what it does and has committed to achieve Net Zero carbon emissions for scope 1 and 2 by 2050. CLI contributes to the environmental and social well-being of the communities where it operates, as it delivers long-term economic value to its stakeholders.

Visit http://www.capitalandinvest.com/ for more information.