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ASCOTT REIT ACQUIRES PRIME FREEHOLD LIMITED-SERVICE BUSINESS HOTEL IN SYDNEY AUSTRALIA FOR A$60.6 MILLION

Property Markets / Transactions

Australia

Apr 08 2019

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Ascott Residence Trust (Ascott Reit) is acquiring Felix Hotel, a prime freehold limited-service business hotel located in close proximity to Sydney Airport, for A$60.6 million (S$58.8 million1). The 150-room property will be rebranded as Citadines Connect Sydney Airport upon completion of the acquisition in May 2019. This will be Ascott Reit’s first business hotel in Australia and its first property to be managed by its sponsor, The Ascott Limited (Ascott) under the new Citadines Connect brand. 

The acquisition will bolster Ascott Reit’s portfolio in Australia to over 900 units across six properties. Ascott Reit currently owns three properties in Sydney – Quest Mascot, Quest Campbelltown and Quest Sydney Olympic Park, in addition to Citadines St Georges Terrace Perth and Citadines on Bourke Melbourne. 

Mr Bob Tan, Ascott Residence Trust Management Limited’s (ARTML) Chairman, said: “This acquisition will deepen Ascott Reit’s presence in the stable and resilient market of Australia, adding to our portfolio a quality property that provides good yield in the highly sought-after Sydney market. Well supported by a range of industries, and a transparent and well-regulated business environment, Australia has consistently ranked as one of Ascott Reit’s top contributing markets in terms of gross profit. This acquisition will further strengthen our investment in developed markets, which collectively account for almost 80% of the asset value for Ascott Reit. Ascott Reit will continue to seek opportunities in key markets with strong corporate demand, such as Australia, Japan, Europe and the U.S., to deliver strong yield and growth in distribution income for our unitholders.” 

The accretive acquisition, with an EBITDA yield of over 6%, will be funded by bank loans, divestment proceeds or a combination of both2. In line with Ascott Reit’s strategy to redeploy capital and invest in higher-yielding assets, the earlier announced divestment of Ascott Raffles Place Singapore3 will provide Ascott Reit with the financial flexibility to acquire the Sydney property and enhance returns to unitholders. 

Ms Beh Siew Kim, ARTML’s Chief Executive Officer, said: “The target business hotel is adjacent to another property owned by Ascott Reit – the 91-unit Quest Mascot which has been enjoying over 85% occupancy. It will enable us to leverage scale and increased operational efficiency from the clustering effect across these Ascott-managed properties4. With this enhanced presence in the vicinity of Sydney Airport, Ascott Reit is not only well positioned to benefit from the growing transient traveller traffic, but more importantly gain access to a significant number of transport and logistics-related national corporate accounts, as well as to capture demand from the growing industries in its neighbouring suburbs.” 

The property was completed and opened in February 2018. Located in Mascot within the city of Botany Bay, it enjoys a strategic location within walking distance to the Mascot railway station and Sydney Airport – Australia's busiest airport – which catered to around 44.4 million passengers in 2018 and is forecast to receive around 60.7 million passengers by 20335. The business parks of Alexandria, Botany, Mascot and Waterloo, The Lakes and The Australian golf clubs as well as the Westfield Eastgardens Shopping Centre are all nearby. Sydney’s Central Business District is within a 15-minute drive or ride by train. The precinct is further earmarked for development to accommodate future population and employment growth capitalising on its accessibility to public transport. 

Ms Beh added: “Our sponsor, Ascott, who has more than two decades of experience in Australia, will manage the property under its latest Citadines Connect brand. It taps on Ascott’s well-established and fast-growing Citadines brand while offering a product to cater to shorter stays and a more transient guest profile. Citadines Connect Sydney Airport will be Ascott Reit’s first limited-service business hotel in Australia that complements and extends our product offerings in the market. At Citadines Connect Sydney Airport, jetsetters and road warriors who travel across different time zones can choose to self-check-in at the sky lobby reception and savour the convenience of a 24-hour well-stocked ‘Grab & Go’ food and beverage bar and round-the-clock gymnasium.” 

Citadines Connect Sydney Airport features a contemporary design and houses 150 rooms ranging from 18-sqm to 40-sqm units, each decked with premium king or queen bed and a 55-inch internet-enabled smart television that supports Netflix streaming. The 12-storey property also boasts ‘Refresh & Recharge’ spaces including a sky bar, sky lounge and outdoor terrace. Business travellers will appreciate the conferencing facilities, carpark spaces and complimentary high-speed Wi-Fi and USB charging outlets widely available throughout the property. With views of the airport, Botany Bay and Greater Sydney, the unique property is a sanctuary that provides all the essentials to meet the needs of transient business and leisure travellers. 

 

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