The two entities have entered into a merger agreement to create the largest trust company in the APAC region, and the 7th largest listed on the Singapore Stock Exchange (SGX). This will allow Ascott Reit to diversify its global portfolio and increase its asset value by 33%.
This merger represents an asset value of SGD 7.6 billion (Singapore dollars). Ascott REIT (Ascott Residence Trust), a listed real estate investment company (SIIC), will thus include all the shares of A-HTRUST (Ascendas Hospitality Trust). Ascott REIT's global portfolio now includes all 14 A-HTRUST hotels, bringing the number of properties owned in APAC, Europe and the United States to 88.
Mr Bob Tan, chairman of Ascott Residence Trust Management Limited, explains that the interest of this merger is multiple: "The Combination is a win-win for both Ascott REITs and A-HTRUST’s unitholders. Ascott REIT as a combined entity will see our asset value grow by 33% to S$7.6 billion and our Distribution per Unit increase by 2.5% for FY 2018 on a pro forma basis. The combined entity will have a higher proportion of stable income derived from master leases; well balanced by growth income derived from management contracts. With access to a larger capital base and a higher debt headroom of about SG$1.0 billion, we will have greater financial flexibility to seek more accretive acquisitions and value enhancements. 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 company owned by CapitaLand could thus increase its growth and achieve wider margins. Mr Chia Kim Huat, Lead Independent Director at A-HTRUST Managers, confirms: "The combined entity would be well-positioned to benefit from a strong sponsor in CapitaLand and its lodging unit, The Ascott Limited. The Combination is a transformational transaction consistent with A-HTRUST’s strategy to create a stronger, diversified and resilient platform that will deliver sustainable growth to investors. The combined entity will be CapitaLand’s sole listed hospitality trust platform with an enlarged portfolio and mandate to invest globally. It will also become Asia Pacific’s largest hospitality trust, raising its profile amongst the investment community and increasing its funding flexibility, setting it up for long-term success."
Ascott Residence Trust (Ascott REIT) is managed by Ascott Residence Trust Management, which itself acts as the investment company to the group The Ascott Limited. The properties of Ascott REIT, meaning residences with services, rental accommodations and other rental accommodations are present in 14 countries for 37 cities worldwide and are operated under the brands Ascott, Citadines and Somerset.
The announcement of this merger coincides with the desire of The Ascott Limited to pursue a major growth policy that Ascott REIT is participating in and it has resulted in the transformation of their digital ecosystem.