CapitaLand to merge S-REITs into Asia-Pacific's largest hospitality trust

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Singapore’s CapitaLand, which completed its merger with Ascendas-Singbridge this week, plans to combine the Ascott Residence and Ascendas Hospitality trusts into Asia Pacific’s largest hospitality trust, with S$7.6bn (US$5.6bn) of assets.

The combined entity will become the eighth largest hospitality trust on the global stage, in addition to becoming the seventh biggest trust on the Singapore stock exchange.

A-HTRUST’s Park Hotel Clarke Quay (image: CapitaLand)

Ascott REIT will acquire all A-HTRUST shares through a cash and stock offer to A-HTRUST shareholders in a deal worth S$1.235bn in total, CapitaLand Group said in an announcement.

The deal will bring together Ascott REIT’s serviced residence-focused portfolio with A-HTRUST’s 14 Asia Pacific hotels to make a portfolio of 88 assets comprising more than 16,000 units across Asia Pacific, Europe and the US.

Read more: Singapore REITs poised for further consolidation

“The combined entity will have a higher proportion of stable income derived from master leases; well balanced by growth income derived from management contracts,” said Ascott Residence Trust Management Limited chairman Bob Tan.

Ascott Residence Trust Management Limited CEO Beh Siew Kim said earnings contribution from developed countries was expected to increase to 82% on a pro forma basis post-merger.

“This will facilitate the inclusion of Ascott Reit into the FTSE EPRA Nareit Developed Index and potentially result in higher trading liquidity and a larger investor base for us,” she said.

The combined REIT will become CapitaLand’s sole listed hospitality trust platform and will have a mandate to invest globally.

A-HTRUST Managers CEO Tan Juay Hiang noted that the enlarged portfolio would have reduced concentration risk with no single country accounting for more than 20% of gross profit.

CapitaLand offloads Central China Real Estate stake for US$363m

The proposed merger follows CapitaLand’s disposal of its entire 24.09% stake in Hong Kong-listed Central China Real Estate (CCRE) for HK$2.83bn (US$363m) earlier this week.

CapitaLand sold the interest to existing shareholder Joy Bright Investments, as part of its divestment program, which has an annual target of at least S$3bn.

The deal, which equates to HK$4.30 per share, is scheduled to close in 3Q19.

“In view that CCRE operates primarily in Henan Province, outside of CapitaLand’s core city clusters, the divestment would allow us to reallocate capital to other opportunities in our core businesses,” said Lucas Loh, President, China at CapitaLand Group.

CapitaLand’s five core city clusters in China are Beijing/Tianjin, Chengdu/Chongqing/Xi’an, Shanghai/Hangzhou/Suzhou/Ningbo, Guangzhou/Shenzhen and Wuhan.

Loh said China remained an important core market following the merger, with the company organising its newly enlarged China portfolio into three business lines: residential and urban development, retail and commercial, and business parks.

CapitaLand completes Ascendas-Singbridge merger

CapitaLand Group completed its transaction with Singaporean Government-owned Temasek to acquire Ascendas-Singbridge this week, first announced in January this year.

CapitaLand has expanded its assets under management to more than S$123bn post-merger to become one of Asia’s largest diversified real estate groups.

The group now owns a network of commercial, retail; business park, industrial and logistics; integrated development, urban development; residential; lodging; as well as fund and asset management businesses that span more than 30 countries.