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Ascott to Double Asset Size of Ascott Residence Trust to S$2.85 Billion

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Ascott has, through its subsidiaries, entered into conditional sale and purchase agreements to divest 28 of its serviced residence properties to Ascott Residence Trust (Ascott Reit) for a sale consideration of S$969.6 million.

The divestment consists of 26 serviced residences in Europe and one property each in Singapore and Vietnam. Ascott is expected to realise a net gain of approximately S$52.1 million from the divestments.

At the same time, Ascott will purchase Ascott Reit’s entire interest in Ascott Beijing, a premium serviced residence property, for S$214 million and will enhance and reposition the property for future strata-title sale.

Mr Lim Chin Beng, Chairman of The Ascott Limited said, “This is an important milestone for Ascott as it continues to extend its leadership as the world's largest international serviced residence owner-operator. We will leverage on this opportunity to reconstitute Ascott’s portfolio and inject quality stabilised assets into Ascott Reit, which is in line with our capital recycling strategy. It is also consistent with CapitaLand’s business model of holding stabilised income-producing assets in REITs. At the same time, these transactions will almost double Ascott Reit’s asset size to S$2.85 billion, transforming the Reit into a bigger and stronger platform to complement Ascott’s global growth strategy. Ascott will not only benefit from the divestment gains but will continue to earn fees from operating the properties and managing the Reit. Since Ascott will maintain its 47.7% share in Ascott Reit, it will also continue to earn distribution income from the Reit.”

The divestment of the European properties will transform Ascott Reit from a Pan-Asian into an international REIT and catapult it from being the 12th largest to the 6th largest S-REIT by asset size. Ascott Reit’s right of first refusal will expand to include properties in Europe and will thus increase its pipeline of properties. Ascott Reit currently has the right of first refusal to acquire Ascott’s operating serviced residences in the Pan-Asian region before Ascott divests them to a third party.

Mr Lim Ming Yan, Chief Executive Officer, The Ascott Limited said, “These proposed transactions are an important part of the transformation of Ascott. Besides strengthening and transforming Ascott Reit, the sale consideration of about S$970 million will also provide Ascott the financial capacity to capture new opportunities in Asia and Europe. In addition to our key markets like China, Singapore, Vietnam and India, we are also seeing attractive investment prospects in Paris, London and key cities in Germany.”

Mr Lim Ming Yan added, “After the divestment, Ascott will continue to operate the 28 properties which is consistent with our plan to scale up to 40,000 apartment units by 2015. Having significant scale will enable us to further enhance our award-winning hospitality through upgrading our people, hospitality management systems and properties.”

The 28 properties with 3,347 apartment units which Ascott is divesting to Ascott Reit are located in Paris and the regional cities of France; London, the United Kingdom; Brussels, Belgium; Berlin and Munich, Germany; and Barcelona, Spain; while the Asian properties are Citadines Singapore Mount Sophia and Somerset Hoa Binh in Hanoi.

Currently, Ascott has a total of 47 properties with over 5,200 apartment units in Europe, nine properties with over 900 units in Singapore, eight properties with over 1,300 units in Vietnam and 33 properties with over 6,300 units in China.

The acquisition and divestments are inter-conditional upon the other being completed such that if any of the acquisition or the divestments is not completed, neither transaction will take place.

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