CapitaLand’s wholly owned lodging business unit The Ascott Limited is accelerating its growth globally with the signing of 26 properties with over 6,000 units across 22 cities and 11 countries. The properties, which will open in phases from 2019 to 2023, are mostly signed under management contracts, with three on franchise agreements.
In the Middle East, Africa and Turkey region, Ascott Corniche Alkhobar is scheduled to open in Q3 this year, followed by four new Ascott properties in the Kingdom in 2020: Somerset Downtown Alkhobar, Ascott Villas Riyadh, Somerset Corniche Jeddah and Citadines Abha. The recently announced Citadines Al-Aziziyah Alkhobar signing is slated for opening in Q4 2021. With a current presence of 24 properties across 11 cities in the Middle East, Africa and Turkey, Ascott totals more than 3,500 units both in operation and and in the pipeline.
To date this year, Ascott has signed contracts for over 40 properties with more than 8,000 units, an increase of over 40 percent in units compared with the same period in 2018. Ascott has also opened 16 properties with over 2,000 units, a 70 percent increase in operational units compared with 2018.
Kevin Goh, Ascott’s chief executive, said: “We are fast expanding Ascott’s global network of properties as we continue to pursue an asset-light business model to boost our recurring fee income. While we achieve strong momentum in expanding our global lodging business through strategic alliances, management contracts, franchise and leases, we are also accelerating the number of new property openings.”
He added: “For the first quarter this year, our operational units have contributed 59.7 million Singaporean dollars ($44.2 million) of fee income. We are targeting to open over 40 properties with about 8,500 units this year. For every 10,000 serviced residence units signed, we are expecting to earn approximately 25 million Singaporean dollars in fee income annually as the properties progressively open and stabilize. Through these growth strategies, we are looking forward to the fee income boost when we achieve our target of 160,000 units worldwide by 2023.”
With the recent completion of the Ascendas-Singbridge transaction, CapitaLand through Ascott has become the sponsor of both Ascott Residence Trust (Ascott Reit) and Ascendas Hospitality Trust (A-HTRUST). Including the assets held under these two hospitality trusts, lodging assets under CapitaLand are valued at 31 billion Singaporean dollars, equivalent to 25 percent of the group’s total assets under management. An announcement proposing to combine the two trusts has been made on July 3.
Goh said: “The combination of Ascott Reit and A-HTRUST is a win-win for both unit holders as the combined entity will be Asia Pacific’s largest hospitality trust with an asset value of 7.6 billion Singaporean dollars, making it a lot more attractive to investors.”