SINGAPORE – The Ascott Limited (Ascott), the wholly owned serviced residence business of CapitaLand (SGX:C31) is acquiring an additional 60% stake in Quest Apartment Hotels (Quest) for A$180 million (S$191 million).
The acquisition increases Ascott’s stake in Quest from the current 20 percent to 80 percent, propelling Ascott to become the largest serviced residence provider in Australasia.
With 180 properties located in regional and metropolitan areas across Australia, New Zealand and Fiji, the acquisition will boost Ascott’s portfolio by over 11,000 units to more than 67,000 units across 507 properties and 124 cities globally.
At the same time, Ascott has the option to acquire the remaining 20% interest in Quest, subject to terms and conditions.
“Increasing our stake in Quest to become its majority shareholder will leapfrog Ascott to become the leading serviced residence provider in Australasia. This acquisition will give Ascott an instant boost of over 11,000 units,” said Lee Chee Koon, Ascott’s Chief Executive Officer.
Besides entrenching Ascott’s presence in the developed and stable market of Australia, the acquisition will allow the company to capitalise on the established Quest brand and its highly scalable business format franchise systems and know-how, and further apply the franchise platform as a driver of growth for Ascott, Lee added.
“Since Ascott’s acquisition of a 20% stake in Quest in 2014, Quest’s network revenue has seen a healthy annual growth of 6%, resulting in strong annual profit earnings primarily from Quest’s recurring fee income,” said Paul Constantinou, Chairman of Quest Apartment Hotels.
Constantinou said Quest will now further leverage the strength of Ascott’s globally recognised, award-winning brands and fast track its international expansion, whilst maintaining its successful franchise format business, along with the value and integrity of the Quest brand,.
In addition, Ascott has acquired its first serviced residence in Brisbane as part of its strategic partnership with Quest.
The 100-unit freehold serviced residence to be developed on a turnkey basis is acquired from an unrelated local property developer for A$24 million (S$25 million).
It will be named Quest Cannon Hill and operated as a Quest franchise when the property opens in 2018. Quest Cannon Hill is the second acquisition under Ascott’s strategic partnership with Quest.
With the addition of Quest Cannon Hill, Ascott currently owns and manages 10 serviced residences with over 1,300 apartment units in Brisbane, Greater Sydney, Hobart, Melbourne and Perth under the Citadines, Somerset and Quest brands.
Quest has 180 properties with over 9,000 existing units in Australia, New Zealand and Fiji, and over 2,000 units under construction. – BusinessNewsAsia.com