Ascott expands global presence with 26 new properties across 11 countries
Steady rise in recurring fee income and enlarged asset size strategically position lodging business as a growing contributor to CapitaLand’s earnings |
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Ascott expands global presence with 26 new properties across 11 countries
Steady rise in recurring fee income and enlarged asset size strategically position lodging business as a growing contributor to CapitaLand’s earnings |
Category: Worldwide - Industry economy
- Hotel projects
This is a press release selected by our editorial committee and published online for free on 2019-07-16
CapitaLand’s wholly owned lodging business unit, The Ascott Limited (Ascott), is accelerating its growth globally with the signing of 26 properties with over 6,000 units across 22 cities and 11 countries. The properties, which will open in phases from 2019 to 2023, are mostly signed under management contracts, with three on franchise agreements. To date this year, Ascott has signed contracts for over 40 properties with more than 8,000 units, an increase of over 40% in units compared with the same period in 2018. Ascott has also opened 16 properties with over 2,000 units, a 70% increase in operational units compared with 2018.
Mr Kevin Goh, Ascott’s Chief Executive Officer, said: “We are fast-expanding Ascott’s global network of properties as we continue to pursue an asset-light business model to boost our recurring fee income. While we achieve strong momentum in expanding our global lodging business through strategic alliances, management contracts, franchise and leases, we are also accelerating the number of new property openings. For the first quarter this year, our operational units have contributed S$59.7 million of fee income. We are targeting to open over 40 properties with about 8,500 units this year. For every 10,000 serviced residence units signed, we are expecting to earn approximately S$25 million in fee income annually as the properties progressively open and stabilise. Through these growth strategies, we are looking forward to the fee income boost when we achieve our target of 160,000 units worldwide by 2023.”
With the recent completion of the Ascendas-Singbridge transaction, CapitaLand through Ascott has become the sponsor of both Ascott Residence Trust (Ascott Reit) and Ascendas Hospitality Trust (A-HTRUST). Including the assets held under these two hospitality trusts, lodging assets under CapitaLand are valued at S$31 billion, equivalent to 25% of the Group’s total assets under management. An announcement proposing to combine the two trusts has been made on 3 July 2019.
Mr Goh said: “The combination of Ascott Reit and A-HTRUST is a win-win for both unitholders as the combined entity will be Asia Pacific’s largest hospitality trust with an asset value of S$7.6 billion, making it a lot more attractive to investors. A larger investment entity tends to trade better, as well as enjoy higher liquidity and greater cost efficiency. The combined entity will also have greater financial flexibility to seek more accretive acquisitions and value enhancements. Ascott as a sponsor can focus on growing and injecting our lodging assets into a single hospitality trust, and recycle capital into new development opportunities. At the same time, Ascott will continue to benefit and participate in the future growth of these quality assets through our sponsored stake in the trust.”
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