Singapore: Ascott Residence Trust has launched a rights issue to raise funds for serviced apartment property acquisitions.
The rights issue will raise S$442.7 million which will be used to partly fund Ascott Reit’s acquisition of its first property in Frankfurt and its second in Hamburg from The Ascott Limited (Ascott) for €65.4 million (S$97.2 million)1.
The acquisitions of the two operating serviced residences, Citadines City Centre Frankfurt and Citadines Michel Hamburg, will be concurrent with the purchase of Ascott Orchard Singapore.
Bob Tan, Ascott Residence Trust Management Limited‘s (ARTML) chairman, said: “The rights issue will provide unit holders with the opportunity to subscribe for the rights units at an attractive price while benefitting from Ascott Reit’s future growth. Ascott Reit’s acquisitions of these quality assets in prime locations will strengthen its portfolio and broaden its earnings base. It will increase our presence in the stable market of Germany, Europe’s largest economy, where we currently own three properties in Berlin, Hamburg and Munich. Ascott Reit will benefit from greater economies of scale by adding a second property in Hamburg which has an established and steadily growing hospitality market. Extending our footprint to Frankfurt will allow us to further diversify Ascott Reit’s portfolio and the master leases for these properties will enhance income stability.”
He added: “When the acquisitions in Germany and Singapore are completed, Ascott Reit’s asset size will expand to S$5.3 billion, strengthening its position as the largest hospitality REIT in Singapore. Ascott Reit’s market capitalisation will also grow to S$2.4 billion, increasing its trading liquidity. We remain focused on creating stable returns to Unitholders and will continue to look for acquisitions in gateway cities in markets such as Australia, Japan, Europe and the US”
Ronald Tay, ARTML’s CEO, said: “There is strong demand for accommodation by corporate travellers in Frankfurt and Hamburg. Frankfurt is Germany’s financial and transportation hub where many global companies are located. Hamburg is Germany’s second largest city and ranked the second best city in Europe for investment, after Berlin. Hamburg is also home to Europe’s third largest container port, making the city a key international trade centre in the region. Both Frankfurt and Hamburg host many international and regional trade fairs, attracting millions of visitors each year.”
He added: “Singapore is among the top 10 destinations for foreign direct investment globally3 and its visitor arrivals and tourism receipts hit historic high in 2016. Ascott Orchard Singapore is strategically located in the city’s premier shopping destination, with close proximity to premium medical facilities and easy access to the business district. We expect the hospitality sector to pick up given the lack of new supply in 2018. We believe Ascott Orchard Singapore will draw business and leisure travellers as the city continues to reinvent itself to remain an
attractive investment and tourism hub.”</p
