Singapore-based CapitaLand’s serviced residence unit The Ascott Ltd is investing $59.9 million (S$81.5 million) to acquire and refurbish its first property in Silicon Valley, the fourth acquisition in US for Ascott within five months.
The latest acquisition, The Domain Hotel, is situated along Sunnyvale’s primary thoroughfare, El Camino Real, that leads to San Francisco City and San Jose. The property is surrounded by numerous renowned corporations and startups including Apple’s new $5 billion headquarter campus, which will accommodate more than 12,000 employees, Google, Amazon, Adobe, Intel, Netflix, Nvidia, PayPal and Tesla Motors.
The latest acquisition is aimed at capturing the fast-growing demand from global technology companies and multinational corporations, Ascott said in a statement issued on Thursday.
The 136-unit hotel will continue to operate as it undergoes refurbishment in phases before being rebranded to Citadines Cupertino Sunnyvale in the fourth quarter of 2018, it said.
This will be Ascott’s second Citadines-branded property in the US, following its acquisition of Hotel Central Fifth Avenue New York in May this year. The latter is also set to be renovated and rebranded to Citadines Fifth Avenue New York in 2018.
Ascott has more than tripled last year’s portfolio to over 2,900 units. It is aiming to surpass its target of 80,000 units globally by 2020 and continues to seek opportunities in the U.S. in cities such as New York, Boston, Los Angeles, San Francisco and Washington DC.
“We are acquiring Ascott’s first property in Silicon Valley which will allow us to invest in one of the most desirable property markets in the U.S. Silicon Valley has a high growth economy and is home to some of the world’s biggest and leading technology companies and multinational corporations, generating significant demand for accommodation,” said Ascott CEO Lee Chee Koon.
He added that the recent majority-stake acquisition of Synergy Global Housing in the US will also enable Ascott to capitalise on its strong customer base of Fortune 500 companies and major Silicon Valley technology firms. Together with its five properties in the US, the serviced residence company claims to be in a good position to capture a ready pool of corporate clients.
CapitaLand, which is mainly known as a real estate firm, has in recent times evolved as an active investor. In August this year, the firm set up its first private equity fund in Vietnam closing at $300 million with a lifespan of eight years. The fund will invest in Grade A commercial real estate in Vietnam.
CapitaLand has also set up a private equity fund management business and consolidate its private equity real estate funds into one unit, CapitaLand Investment Management. It has roped in former HSBC real estate finance head James Lim to head it. CapitaLand is currently targeting to launch six new funds with total assets under management (AUM) of up to S$10 billion by 2020.