Ascott invests in Australia
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Singapore-based serviced apartment operator Ascott has made a major move into the Australian market.
The company, which is owned by real estate giant CapitaLand, has entered into a strategic partnership with Quest Serviced Apartments, which currently operates 112 properties in Australia.
As part of the deal, Ascott has acquired a 20% stake in Quest for AU$28.8 million (US$25.3m) and said it expects to invest up to AU$500m to acquire new properties for Quest over the next five years. Under the terms of the deal, Ascott will have the right of first refusal to acquire properties sourced by Quest. Quest will then provide a lease for the properties, which will be operated under franchise agreements using the Quest brand.
Ascott also has the option of increasing its stake in Quest to 30% in future.
And in a separate deal, the Ascott Residence Trust has entered into agreements to acquire three existing Quest properties in the Greater Sydney area for AU$83m. Quest Sydney Olympic Park, Quest Campbelltown and Quest Mascot will continue to be operated as franchises under the Quest brand.
“Ascott has an established presence in Australia where our serviced residences enjoy a strong demand from travellers to the country, and we see vast potential growth opportunities for serviced residences,” said Lee Chee Koon, Ascott’s CEO.
“Serviced apartments represent over 25% share of the accommodation market in Australia where Quest is a leading player. Ascott has many global customer accounts and strong global systems to manage our properties. Through our strategic partnership with Quest, we can leverage each other’s knowledge and contacts in Australia to rapidly extend our presence in the growing market for international quality serviced apartments. We also expect a stronger pipeline of properties in Australia for Ascott to acquire.”
The Australian venture marks the latest stage in Ascott’s international strategy of expansion through alliances. The company has already penned agreements with two major developers in China, and Lee said Ascott will continued to “seek investment opportunities” in such markets as “Singapore, India, capital cities in Southeast Asia, Paris, London and key cities in Germany”.
“We will also continue to expand through management contracts, strategic alliances and franchises to achieve our target of 80,000 apartment units globally by 2020,” he added.
Paul Constantinou, chairman of Quest, said the Ascott deal would allow his company to accelerate its expansion plans, “to secure 250 properties across Australia and New Zealand before the end of this decade.”
Quest currently has around 150 properties with 8,000 apartment units in Australia, New Zealand and Fiji, and a further 1,500 units under construction. Ascott’s Australian portfolio consists of five serviced residences with more than 670 units.
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