CapitaLand’s serviced residence unit, The Ascott, has signed an agreement to acquire a 20% stake in Quest for A$28.8 million (US$25.30 million). As part of the agreement, Ascott has the option to increase its stake in Quest to 30%.

 

Both companies entered into a strategic partnership where Ascott expects to invest up to A$500 million to acquire new properties that Quest will secure for its franchise in Australia over the next five years. Ascott will have a right of first refusal to acquire the properties sourced by Quest. The latter will then provide a lease for the properties, which will be operated under franchises using the Quest brand.

 

In a separate agreement, Ascott’s real estate investment trust, Ascott Residence Trust will acquire three operating serviced residences in Greater Sydney from Quest for A$83. These are Ascott Reit’s maiden acquisitions in New South Wales.

 

The accretive acquisitions at an Ebitda  yield of 7.7% are expected to increase Ascott Reit’s 2013 distribution per unit from 8.40 cents to 8.46 cents on a pro forma basis.

 

Ascott Reit will receive fixed rent by taking over the leases for the three serviced residences - Quest Sydney Olympic Park, Quest Campbelltown and Quest Mascot - and they will continue to be operated under franchises using the Quest brand.