Singapore: CapitaLand will merge Ascott Residence Trust and Ascendas Hospitality Trust (A-HTrust) to form the largest hospitality trust in the Asia Pacific region.
The combined trust will be the eighth biggest globally, with a total asset value of S$7.6 billion. The combined entity will also be the seventh largest trust listed on the Singapore Exchange (SGX) by asset value.
The merger creates an enlarged portfolio of 88 properties with more than 16,000 units in 39 cities and 15 countries across Asia-Pacific, Europe and the US.
It will also diversify Ascott Reit’s global portfolio and give it access to the cities of Brisbane and Seoul.
“With access to a larger capital base and a higher debt headroom of about S$1 billion, we will have greater financial flexibility to seek more accretive acquisitions and value enhancements,” said Bob Tan, Ascott Residence Trust Management Limited’s chairman. “The combined entity can then be strategically positioned to potentially enjoy a positive re-rating of the unit price and gain a wider investor base, which would be beneficial to all our unitholders.”
The merger follows calls from activist fund Quarz Capital Management, a long-term shareholder of A-HTrust, to merge both entities.
Regarding the two hospitality trusts’ overlapping mandates, CapitaLand group chief executive Lee Chee Koon had told shareholders in April that one of the ways to resolve it was through a merger.
Once the merger is completed, CapitaLand expects to have a 40.2 per cent stake in the new entity, called Ascott Reit-BT.
