Ascott Residence Trust (Ascott Reit) and Ascendas Hospitality Trust (A-HTRUST) have announced a proposed combination that will see them become the largest hospitality trust in Asia Pacific, and eighth largest globally, with an asset value of S$7.6 billion (US$5.6 billion).
The total consideration for the combination is S$1,235.4 million, comprising S$61.8 million in cash and 902.8 million new Ascott Reit-BT Stapled Units. This will take effect in the form of a trust scheme of arrangement, with Ascott Reit acquiring all the A-HTRUST Stapled Units at a unit cost of $1.0868, comprising S$0.0543 in cash and 0.7942 Ascott Reit-BT Stapled Units issued at a price of S$1.30.
The transaction brings together Ascott Reit’s global portfolio that comprises predominantly serviced residences and A-HTRUST’s 14 hotels in Asia Pacific, creating an enlarged portfolio of 88 properties with more than 16,000 units in 39 cities and 15 countries across Asia Pacific, Europe and the United States. It will also further diversify Ascott Reit’s global portfolio with foray into new gateway cities – Brisbane and Seoul.
The joint combination is “a win-win” for both parties, as Ascott Reit’s asset value will grow by 33% to S$7.6 billion and Distribution per Unit increase by 2.5% for FY 2018, according to Bob Tan, chairman, Ascott Residence Trust Management Limited.
“[The combination] will present us with an enlarged capacity to acquire more quality assets as well as undertake more development and conversion projects, thereby increasing their asset values over time,” said Beh Siew Kim, CEO, Ascott Residence Trust Management Limited.
“The enlarged portfolio will be further diversified with no single country accounting for more than 20% of gross profit, thereby reducing concentration risk,” commented Tan Juay Hiang, CEO, A-HTRUST Managers.