Ascott joint venture to acquire Melbourne property for S$72m

People gather at the entrance to Federation Square in central Melbourne, Australia, in 2013.
People gather at the entrance to Federation Square in central Melbourne, Australia, in 2013. PHOTO: ST FILE

SINGAPORE - CapitaLand's wholly owned serviced residence unit, The Ascott Ltd, is acquiring its first serviced residence in Docklands, Melbourne as part of its A$500 million (S$509 million) strategic partnership with Australia's Quest Apartment Hotels.

The 221-unit property will be acquired for A$71 million through a 50:50 joint venture between Ascott and Qatar Investment Authority (QIA). Quest will lease the serviced residence, which will be named Quest NewQuay Docklands, and operate it under Quest's franchise when the property opens in 2019. Quest NewQuay Docklands will be Quest's largest property in its network.

Said Mr Lee Chee Koon, Ascott's chief executive officer: "Ascott is a global serviced residence leader that owns and manages over 46,000 units worldwide and we have a strong base of customer accounts that are multinational companies, while Quest is a leading operator in Australia with more than 80 per cent of its customers from Australia's top companies.

"Through our strategic partnership with Quest, we can combine our expertise to drive Ascott's expansion in Australia and enjoy stable income as Quest will provide fixed leases for the properties and operate them under its well-established franchise.

"By taking a stake in Quest, Ascott also stands to benefit from the growth of the Quest franchise."

Through an alliance formed in late-2014, Ascott will invest up to A$500 million in new properties that Quest will secure for its franchise in Australia until 2019. Ascott has a right of first refusal to acquire the properties sourced by Quest.

In addition, Ascott acquired a 20 per cent stake in Quest, with an option to increase it to 30 per cent. Ascott's real estate investment trust, Ascott Residence Trust, also acquired three operating serviced residences in Greater Sydney from Quest that are being operated under Quest franchises.

Mr Lee added: "This property in Melbourne is our first acquisition in Australia in partnership with QIA and our fourth within a span of seven months."

Ascott's serviced residence global fund was set up through a 50:50 joint venture with QIA in July 2015 with each contributing US$300 million (S$405.4 million) of equity. The fund invests in serviced residences and rental housing properties with an initial focus on Asia-Pacific and Europe.

Ascott's four acquisitions made in partnership with QIA have a total investment amount of US$270 million and would be funded partly by debt.