Ascott Residence Trust to acquire 9 properties from sponsor

Ascott Residence Trust (ART) yesterday proposed the acquisition of nine properties from its sponsor, The Ascott Limited, at an estimated total capitalised cost of $318.3 million.

The acquisition is expected to strengthen ART's presence in its existing markets, the stapled hospitality group's managers said in bourse filings before the market opened.

The assets - serviced residences, rental housing and student accommodation - are predominantly located in the Asia-Pacific region, with seven of the assets in Australia, Japan and Vietnam, and two in France and the United States.

The acquisition will increase ART's distribution by $9.2 million and its pro forma financial year 2021 distribution per stapled security by 2.8 per cent.

The trust also launched a private placement yesterday to raise $150 million, with the offer of new stapled securities to be made to eligible institutional, accredited and other investors. The issue price will range between $1.11 and $1.14 per new stapled security, representing a 2.8 per cent to 5.4 per cent discount to ART's $1.1733 volume-weighted average price.

ART will tap $122.3 million of the placement proceeds to partly fund the $215.2 million consideration for the properties.

Another $25.3 million from the placement will partly fund any future acquisitions, while $2.4 million will be spent on professional and other expenses.

The acquisition of the nine assets is expected to be completed by November, subject to security holders' approval at an extraordinary general meeting to be held on Sept 9.

Three of the assets are serviced residences - Quest Cannon Hill in Brisbane, Australia, and La Clef Tour Eiffel Paris in France, which are on master leases; and Somerset Central TD Hai Phong City in Vietnam.

The latter caters mainly to corporate guests and has an average length of stay of about 11 months.

ART also plans to buy five rental housing properties in Japan that have lease tenures of about two years. They are located in Kyoto, Osaka, Hyogo and Nagoya.

"The addition of the five rental housing properties in Japan and a student accommodation property in the US will increase the proportion of our longer-stay portfolio from 17 per cent to 19 per cent of ART's total portfolio value. This will bring us closer to our target of 25 per cent to 30 per cent for longer-stay assets in the medium term," said Ms Serena Teo, chief executive of ART's managers.

The nine assets, totalling 1,018 units, will grow ART's total assets to $8.3 billion as at end-2021 on a pro forma basis.

Post-acquisition, ART will have a gearing of 38.5 per cent.

ART closed at $1.18 last Friday, up one cent, or 0.9 per cent, before requesting a trading halt yesterday prior to the announcement. It will resume trading today.

THE BUSINESS TIMES