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CapitaLand announces merger of Ascott Reit and Ascendas unit, to create APAC’s largest hospitality trust

The merger will create an enlarged portfolio of 88 properties with more than 16,000 units in 39 cities and 15 countries, combining properties such as Ascott Reit’s serviced residences and A-HTRUST’s hotels.

Property developer CapitaLand on Wednesday announced a proposed merger of Ascott Residence Trust (Ascott Reit) and ASCHT-SG (A-HTRUST) to form the largest hospitality trust in the Asia-Pacific region with a total asset value of S$7.6 billion.

The combined entity will be the eighth largest globally and the seventh largest trust listed on the Singapore Exchange by asset value, the real estate investment trusts (Reits) said in regulatory filings on the bourse.

The merger will create 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, combining properties such as Ascott Reit’s serviced residences and A-HTRUST’s hotels.

The merger is at a consideration price of around S$1.24 billion, comprising S$61.8 million in cash and 902.8 million new units of the new enlarged entity, Ascott Reit-BT.

The merger will be done through a trust of scheme arrangement, with Ascott Reit acquiring all the A-HTRUST stapled units for a consideration of S$1.0868 per A-HTRUST stapled unit, comprising S$0.0543 in cash and 0.7942 Ascott Reit-BT units issued at a price of S$1.30.

The combined entity will have a higher proportion of stable income derived from master leases; well balanced by growth income derived from management contracts, said Mr Bob Tan, Ascott Residence Trust Management Limited’s chairman.

‘Ascott Reit as a combined entity will see our asset value grow by 33% to S$7.6 billion and our distribution per unit increase by 2.5% for the financial year of 2018 on a pro-forma basis,’ Mr Tan said. ‘With access to a larger capital base and a higher debt headroom of about S$1 billion, we will have greater financial flexibility to seek more accretive acquisitions and value enhancements,’ he added.

Mr Chia Kim Huat, the lead independent director of the A-HTRUST Managers commented: ‘The combination is a transformational transaction consistent with A-HTRUST’s strategy to create a stronger, diversified and resilient platform that will deliver sustainable growth to investors.'


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