Ascott Reit, Ascendas Trust propose merger to create APAC’s largest hospitality trust

Ascott Reit’s Ascott Orchard Singapore is located in Singapore’s world-renowned shopping belt Orchard Road. It is a few minutes’ walk from Orchard as well as Somerset Mass Rapid Transit stations with easy access to the Central Business District, world-class shopping malls and premium medical facilities.

Singapore-listed real estate investors Ascott Resident Trust (Ascott Reit) and Ascendas Hospitality Trust (A-HTRUST) have announced a merger proposal to potentially create Asia Pacific’s largest hospitality trust with an asset value of S$7.6 billion ($5.6 billion).

The proposed combined entity, which will be the eighth largest in the world, will also become the seventh largest trust listed on the Singapore Exchange by asset value, according to a joint statement.

Ascott REIT is managed by Ascott Residence Trust Management Ltd (ARTML), an indirect wholly-owned subsidiary of CapitaLand Limited, one of Asia’s largest real estate companies.

The total consideration for the combination is S$1.24 billion ($915 million), comprising S$61.8 million ($45.6 million) in cash and 902.8 million in new Ascott Reit-BT Stapled Units, according to the statement.

Activist fund Quarz Capital Management has been pushing for a merger of the Reits to boost shareholder value and avoid potential conflicts after a deal in January effectively made CapitaLand the owner of the managers of the two Reits.

The combination will be effected by way of a trust scheme arrangement, with Ascott Reit acquiring all the A-HTRUST stapled units for a consideration of S$1.0868 per unit, comprising S$0.0543 in cash and 0.7942 Ascott Reit-BT Stapled Units.

The combined entity will bring together the global portfolio of Ascott Reit and A-HTRUST’s 14 quality hotels in the Asia Pacific region, creating an enlarged portfolio of 88 properties with more than 16,000 units in 39 cities and 15 countries across Asia, Europe, and the US.

“The combination is a win-win for both Ascott Reit’s and A-HTRUST’s unitholders,” said ARTML chairman Bob Tan, adding that the combined entity will have a higher proportion of stable income derived from master leases; well balanced by growth income derived from management contracts.

Chia Kim Huat, Lead Independent Director of the A-HTRUST Managers, said the combined entity would be well-positioned to benefit from a strong sponsor in CapitaLand and its lodging unit, The Ascott Limited.

“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,” Chia said.

The new entity will enjoy a stronger presence in the Asia Pacific, where accommodation continues to be underpinned by the growing middle-income demographics, increasing tourism and economic activities, as well as infrastructure development, according to the statement.

Asia Pacific will make up about 71 per cent of its total portfolio valuation and contribute 68 per cent of its gross profit, with a balance between stable and growth income.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.