Ascott Reit forays into US by acquiring hotel in Times Square for $163.5m

Visual from the company website

Singapore-listed Ascott Residence Trust (Ascott Reit) has forayed into the United States of America by acquiring a hotel in New York Times Square for $163.5 million, the company announced Thursday.

This 411-key asset – Element New York Times Square West hotel – is located in Midtown Manhattan.

This acquisition comes within days of Ascott Reit’s purchase of three serviced residences and four rental housing properties in Australia and Japan.

Also Read: Ascott Reit to acquire 7 assets in Australia and Japan for S$298.3m

The acquisition at an EBITDA yield of 6.2 per cent is expected to increase Ascott Reit’s distribution income in FY 2014 by $0.8 million, translating to a rise in distribution per unit from 8.44 cents to 8.51 cents on a pro forma basis, the company said in a regulatory filing.

Ascott Reit will partly fund the acquisitions of the properties in Australia, Japan and the US with the S$250 million proceeds from its issuance of perpetual securities at a fixed distribution rate of 4.68 per cent per annum. The perpetual securities received strong investor participation with orders exceeding four times of the issue size, the company added.

Also Read: Ascott REIT raises $186m via perpetual securities, to fund potential acquisitions

Lim Jit Poh, Ascott Residence Trust Management Limited’s (ARTML) chairman, said: “This US acquisition and our recent acquisitions in Australia and Japan with a total of 1,563 units will broaden Ascott Reit’s earning base and increase our scale to 11,779 units. Ascott Reit’s asset size will also increase by S$519 million to S$4.6 billion.”

“When the acquisition of the new Cairnhill serviced residence in Singapore is completed in 2017 as targeted, Ascott Reit’s asset size will expand by another S$405 million to over S$5.0 billion. As we aim to grow Ascott Reit’s asset size to S$6.0 billion by 2017, we will continue to actively seek acquisition opportunities from both third parties and our sponsor, The Ascott Limited, in key cities in the Asia Pacific, Europe and the U.S,”he added.

Ronald Tay, ARTML’s chief executive officer, said: “With 411 rooms, this relatively new property, which opened in November 2010, has been achieving strong performance with over 90 per cent occupancy in the last three years.”

He further said that post the acquisition, the property will continue to be operated by LG-39 Management LLC and its affiliates under the ‘Element’ brand through a franchise by Starwood Hotels & Resorts Worldwide, Inc.

“Ascott Reit’s focus is on properties for extended stay and ‘Element’ is a widely recognised international brand for extended stay with an established sales network. We expect the property to continue to perform well and further boost the performance of Ascott Reit’s portfolio,” Try added.

The current operator, which has been running the property since its opening, also operates 19 hotels with over 3,800 rooms in the US.

“Ascott Reit remains open to acquiring properties that are operated by reputable third parties as long as such acquisitions meet our investment criteria and there is avenue for growth,” Tay said.

Also Read:

Ascott opens new property, plans to acquire 10,000 European units by 2020

Ascott buys 20% in Australia’s Quest for $25.4m

Ascott acquires Japanese hotel for S$95-m

Singapore Reporter/s

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

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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.