Ascott REIT to acquire its first property in Dalian, China for RMB571 million
Singapore, 20 February 2014– Ascott Residence Trust (Ascott Reit) has entered into a conditional agreement with Winner Sight Investments Limited to acquire its first serviced residence in Dalian for RMB571 million (approximately S$118.6 million1 ) at an EBITDA yield of 5.5%. On a pro forma basis, the accretive acquisition is expected to increase FY 2013 distribution per unit by 1.5% from 8.40 cents to 8.53 cents.
Mr Lim Jit Poh, Ascott Residence Trust Management Limited’s (ARTML) Chairman, said: “This is Ascott Reit’s first acquisition after our successful rights issue in December 2013 which raised S$253.7 million. It demonstrates our ability to redeploy the funds by investing in yield accretive assets. While this acquisition in Dalian is from a third party, we are also looking at potential acquisitions from our sponsor, The Ascott Limited (Ascott), in key cities in China, Japan, Australia, Malaysia and Europe.”
Mr Lim added: “Our first acquisition in Dalian is in line with Ascott Reit’s strategy of investing in quality assets with prime locations and growth potential to further enhance returns to Unitholders. Dalian is the largest port city in northeast China and the regional hub for foreign trade, high-end manufacturing, international shipping, logistics and exhibition. Dalian enjoys high affluence and an average gross domestic growth rate of 15% per annum over the past decade, attracting a large number of local and foreign enterprises. The acquisition will further entrench Ascott Reit’s presence in our key growth market of China and diversify our geographical presence.”
Mr Ronald Tay, ARTML’s Chief Executive Officer, said: “We are acquiring a prime asset with a strategic location in the heart of Jinzhou New District. China’s first and largest National Economic and Technological Development Zone, Dalian Development Area, is located in the district. Jinzhou New District has attracted a cumulative foreign direct investment of over US$19 billion and is home to many multinational corporations such as Pfizer, Volkswagen and Intel.”
Mr Tay added: “The serviced residence, which commenced operation in 2009, has an average occupancy of about 80% and a strong base of long stay customers. It is also the first international serviced residence in Dalian Development Area. We will refurbish the property to enhance its value and it will be managed by Ascott as Somerset Grand Central Dalian when our acquisition is completed, which is expected to be by mid 2014. Ascott, with its current presence in Shenyang and Dalian, will provide the scale and network effect to further drive the performance of the property.”
The 195-unit serviced residence provides convenient access to the city and Dalian Zhoushuizi International Airport. It is a 25-minute drive from Dalian North Railway Station and within walking distance to the metro station as well as amenities such as supermarket, international schools and hospital.
Part of a mixed-use development that also comprises an office tower and a retail podium, the serviced residence offers a range of one to three-bedroom apartments and penthouses. Facilities at the property include a gymnasium, business centre, swimming pool, spa and children’s play area.
In China, Ascott Reit currently owns seven serviced residences with more than 1,200 apartment units across Beijing, Guangzhou, Shanghai, Shenyang, Suzhou and Tianjin.