Ascott inks $560 million partnership with Australia's largest serviced apartment provider

The Quest Campbelltown. -- PHOTO: THE ASCOTT LIMITED
The Quest Campbelltown. -- PHOTO: THE ASCOTT LIMITED
The Quest Sydney Olympic Park. -- PHOTO: THE ASCOTT LIMITED
The Quest Sydney Olympic Park. -- PHOTO: THE ASCOTT LIMITED

CapitaLand's serviced residence unit, The Ascott Limited, said on Thursday that it has entered into a strategic partnership with Quest Serviced Apartments - Australia's largest serviced apartment provider with 112 properties in the country.

Ascott said it expects to invest up to A$500 million (S$560 million) to acquire new properties that Quest will secure for its franchise in Australia over the next five years. Ascott will have a right of first refusal to acquire the properties sourced by Quest. Quest will then provide a lease for the properties, which will be operated under franchises using the Quest brand.

In addition, Ascott has signed an agreement to acquire a 20 per cent stake in Quest for A$28.8 million (S$32.3 million). As part of the agreement, Ascott has the option to increase its stake in Quest to 30 per cent.

In a separate agreement, Ascott's real estate investment trust, Ascott Residence Trust (Ascott Reit), will acquire three operating serviced residences in Greater Sydney from Quest for A$83.0 million (about S$93.0 million). These are Ascott Reit's first acquisitions in New South Wales.

The accretive acquisitions at an EBITDA yield of 7.7 per cent are expected to increase Ascott Reit's distribution per unit for its 2013 financial year to 8.46 cents from 8.40 cents, on a pro forma basis.

Ascott Reit said will receive fixed rent by taking over the leases for the three serviced residences - Quest Sydney Olympic Park, Quest Campbelltown and Quest Mascot - and they will continue to be operated under franchises using the Quest brand.