Ascott Buys Sydney Serviced Apartment Project for S$192M 

The Ascott Ltd, CapitaLand’s hospitality unit, is buying a freehold serviced residence project in Sydney for S$192 million ($139 million), bringing Ascott’s assets under management to S$10 billion globally, according to an announcement by the company.

The serviced apartment owner-operator is acquiring the 252-room property, which upon completion in 2021 will be operated as Citadines Walker North Sydney, through Ascott Serviced Residence Global Fund, a 50:50 joint venture which the Temasek-invested firm set up with the Qatar Investment Authority in 2015.

“This latest acquisition in Australia is in line with our strategy of growing our fund management portfolio through private equity funds, joint ventures and listed hospitality trusts – all of which provide a core asset base for our asset management business,” said Ascott’s chief executive officer, Kevin Goh. “We believe in achieving scale in the business, and fund management is central to the active capital management strategy of Ascott as a dominant lodging real estate player.”

Goh added that Ascott’s presence in lodging segments including serviced residences, hotels, co-living and multifamily housing provided a ready pipeline of assets in gateway cities, like the Citadines Walker North Sydney, for capital deployment.

Fuel for Proposed Mega-REIT

The acquisition comes two months after Ascott REIT and Ascendas Hospitality Trust jointly announced a proposed merger, which once completed will create the largest hospitality trust in Asia Pacific with an asset value of S$7.6 billion.

The serviced apartments, located in the suburban business hub of North Sydney, will be part of a 48-storey office and retail development that will feature the district’s tallest tower.

Located across the harbour from Sydney’s main financial centre, the development will have access to a train station and a ferry wharf, as well as a new metro station expected to open by 2024.

Contracts Inked on 13 More Residences

At the same time that it announced the Citadines Walker North Sydney acquisition, Ascott revealed that it had signed franchise and management contracts for 13 additional properties across China, Indonesia, Vietnam, France and Kenya.

Including the Sydney project, the 14 new properties offer more than 2,200 units, bringing Ascott’s rooms under management to 112,000 units across over 700 properties.

Having set a target of operating 160,000 units by 2023, Ascott is planning to open another 19 properties with 2,800 units this year. Earlier this year Ascott had announced that it had secured 26 contracts on properties across 11 countries, over half of which were in China, boosting its portfolio to 100,000 units.

“Ascott will continue to ride on this growth momentum to achieve scale with our international network of well-known hospitality brands,” Goh said. “We have an established owner-operator track record of creating value through sound asset management strategies as well as delivering robust and attractive risk-adjusted returns for our investors.”

He added that the capacity to co-invest with capital partners such as QIA allows the company to stay invested in assets for long-term.

Ascott Opens Largest Co-living Centre in SE Asia

The beefing up of Ascott’s portfolio, which includes hotels such as Vertu, Fox and POP! as well as serviced residences, comes just three weeks after the company opened the largest co-living property in Southeast Asia under the “lyf” label, billed as a brand “managed by millennials for millennials”.

lyf Funan Singapore, located in Singapore’s civic and cultural district, spans 121,000 square feet (11,241 square metres) of gross floor area and offers 412 rooms across 279 apartments for the millennial-minded.