Ascott acquires majority stake in Quest apartment hotels for a$180 million to become largest serviced residence provider in Australasia
On track to exceed 2020 target of 80,000 units globally as acquisition boosts portfolio by over 11,000 units
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.
"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
The Ascott Limited is a Singapore company that has grown to be one of the leading international lodging owner-operators. Ascott's portfolio spans more than 180 cities across over 30 countries in Asia Pacific, Central Asia, Europe, the Middle East, Africa and the USA.
Ascott has more than 66,000 operating units and close to 46,000 units under development, making a total of more than 112,000 units in over 700 properties.
The company’s serviced residence and hotel brands include Ascott, Citadines, Citadines Connect, Somerset, Quest, The Crest Collection, lyf, Préférence, Vertu, Harris, Fox, Yello and POP!.
Ascott, a wholly owned subsidiary of CapitaLand Limited, pioneered Asia Pacific’s first international-class serviced residence with the opening of The Ascott Singapore in 1984. Today, the company boasts over 30 years of industry track record and award-winning brands that enjoy recognition worldwide.
Ascott’s achievements have been recognised internationally. Recent awards include World Travel Awards 2019 for ‘Leading Serviced Apartment Brand’ in Europe and the Middle East; Business Traveller Asia-Pacific Awards 2019 for 'Best Serviced Residence Brand'; DestinAsian Readers’ Choice Awards 2019 for ‘Best Serviced Residence Brand’; and TTG China Travel Awards 2019 for ‘Best Serviced Residence Operator in China’.
For a full list of awards, please visit https://www.the-ascott.com/ascottlimited/awards.html.
About CapitaLand Limited
CapitaLand Limited (CapitaLand) is one of Asia's largest diversified real estate groups. Headquartered and listed in Singapore, it owns and manages a global portfolio worth over S$103 billion4 as at 31 March 2019. CapitaLand's portfolio spans across diversified real estate classes which includes commercial, retail; business park, industrial and logistics; integrated development, urban development; as well as lodging and residential. With a presence across more than 200 cities in over 30 countries, the Group focuses on Singapore and China as its core markets, while it continues to expand in markets such as India, Vietnam, Australia, Europe and the USA.
CapitaLand has one of the largest real estate investment management businesses globally. It manages eight listed real estate investment trusts (REITs) and business trusts as well as over 20 private funds. Since it pioneered REITs in Singapore with the listing of CapitaLand Mall Trust in 2002, CapitaLand's REITs and business trusts have expanded to include Ascendas Reit, CapitaLand Commercial Trust, Ascott Residence Trust, CapitaLand Retail China Trust, Ascendas India Trust, CapitaLand Malaysia Mall Trust and Ascendas Hospitality Trust.
Visit www.capitaland.com for more information.