Ascott buys 60% more of Quest for $191m

Quest Cannon Hill is Ascott's first serviced residence in Brisbane. The 100-unit freehold serviced residence, acquired from an unrelated local property developer for A$24 million (S$25 million), will be operated as a Quest franchise when the property
Quest Cannon Hill is Ascott's first serviced residence in Brisbane. The 100-unit freehold serviced residence, acquired from an unrelated local property developer for A$24 million (S$25 million), will be operated as a Quest franchise when the property opens next year.PHOTO: ASCOTT

Total stake makes it the largest serviced residence provider in Australasia

CapitaLand's wholly owned serviced residence unit, The Ascott Ltd, said yesterday it is acquiring an additional 60 per cent stake in Quest Apartment Hotels (Quest) for A$180 million (S$191 million).

The move will increase Ascott's stake in Quest from its current 20 per cent to 80 per cent, making it the largest serviced residence provider in Australasia.

With 180 properties 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 buy the other 20 per cent interest in Quest, subject to conditions.

Said Ascott chief executive Lee Chee Koon: "Scale is important for us to offer more options to customers, strengthen our sales and distribution, and help speed up Ascott's growth.

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"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," he added.

Since Ascott acquired a 20 per cent stake in Quest in 2014, Quest's network revenue has seen annual growth of 6 per cent, Mr Lee noted.

"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."

  • 180

    Number of Quest properties across Australia, New Zealand and Fiji.

  • 9,000

    Number of existing units in Australia, New Zealand and Fiji.

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, the Asia-Pacific, Europe and the Middle East.

In partnership with Quest, Ascott has also acquired its first serviced residence in Brisbane. 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.

It will be called Quest Cannon Hill and operated as a Quest franchise when the property opens next year.

Quest Cannon Hill is the second acquisition under Ascott's strategic tie-up with Quest.

In mid-2016, Ascott bought the 221-unit Quest NewQuay Docklands in Melbourne for A$71 million. Quest NewQuay Docklands will be Quest's largest property in its network when it opens in 2019.

Mr Lee said: "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 ready-operating properties with incumbent leases in Australasia.

"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 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 more than 2,000 units under construction.

A version of this article appeared in the print edition of The Straits Times on July 06, 2017, with the headline 'Ascott buys 60% more of Quest for $191m'. Print Edition | Subscribe