CapitaLand’s wholly-owned serviced residence business unit, The Ascott Limited (Ascott), is acquiring 80 per cent interest in Synergy Global Housing (Synergy), a major accommodation provider in the US, for $33.7 million.
The acquisition will expand Ascott’s footprint in the US. It will also triple Ascott’s portfolio from over 1,000 units to about 3,000 units in the US.
The deal is follows an investment earlier this month in Quest Apartment Hotels.
Lee Chee Koon, Ascott’s CEO, said, “With the acquisition of Synergy as well as our earlier investment in Quest, Ascott is gearing up to transform our business to become an even more active and dominant player in the hospitality ecosystem.”
“As we move up the value chain to acquire strong operating platforms globally, we are getting closer to our customers, understanding their needs better and thereby improving our service and product offerings to them. The synergies to be realised with these majority-stake acquisitions will propel Ascott’s growth at an unprecedented pace.”
According to Lee, the acquisition of a majority stake in Synergy will further increase the scale of its business in the US market and strengthen Ascott’s market position.
Earlier this year, Ascott’s real estate investment trust (REIT), Ascott Residence Trust, acquired the DoubleTree by Hilton Hotel New York – Times Square South, adding to its two properties in Manhattan – Sheraton Tribeca New York Hotel and Element New York Times Square West hotel. Ascott also acquired Hotel Central Fifth Avenue New York, which will be rebranded to Citadines Fifth Avenue New York in 2018.
Lee explains: “With Synergy, it will expand our global cross-selling and distribution network as well as enlarge our talent pool. Ascott will also get an uplift by over 2,000 units located predominantly in the U.S., and increase our global portfolio to close to 70,000 units. We are confident of surpassing our target of 80,000 units well ahead of 2020, as we look at more opportunities to grow through investments, management contracts, franchises and strategic alliances.”
With the US being Ascott’s third largest source market for guests, the acquisition will grant it direct access to Synergy’s corporate customers in the US , which will grant this client base more accommodation options in the US and Internationally.
The acquisition also lays the ground for further expansion into key US cities such like New York, Boston, Los Angeles, San Francisco and Francisco and Washington DC.
In addition to Global Solution Centres in Dublin, Ireland; Hyderabad, India and Singapore; Synergy has a strong foothold in the US, where it leases apartments from partners and property owners to rent to corporate clients. In particular, this investment will give Ascott an immediate presence and access to corporations based in Silicon Valley.
The US corporate housing industry has seen revenue grow at a CAGR of 6.5 per cent from 2012 to 2016. Supply for corporate housing units experienced the fourth successive year of growth in 2016, increasing 4.7 per cent. This availability of units allow corporate housing providers to have the flexibility to adjust inventory in response to customers demand and obtain inventory at competitive rent levels.
In particular, this investment will give Ascott an immediate presence and access to corporations based in Silicon Valley, which includes high- tech powerhouses boasting achievements and influence that extend well beyond the San Francisco Bay Area.
Synergy acts as an accommodation provider for many Fortune 500 companies and major Silicon Valley technology firms, with corporate clients coming from industries such as relocation, healthcare, manufacturing, entertainment, social networking and technology.
Jack Jensky, Co-founder of Synergy Global Housing, said, “Ascott’s acquisition gives Synergy a competitive advantage by growing our global footprint and providing our customers more high-quality international serviced accommodation options to our U.S.-based clients.”
2017 has seen Ascott engage in an array of acquisitions, with the firm becoming the largest serviced residence provider in Australasia through the acquisition of a majority stake in Quest Apartment Hotels.