Asian real estate company CapitaLand’s wholly owned lodging business unit, The Ascott Limited, has launched Citadines Connect, a line of business hotels with selected services, to widen its short-stay offerings as it continues to grow its portfolio. The new flag will operate as a sub-brand of Ascott’s Citadines serviced-residence brand.
The first property to open under the brand already has been signed: Singapore-based REIT Ascott Residence Trust is acquiring the Felix Hotel, a freehold limited-service business hotel located close to Sydney Airport for A$60.6 million.
The 150-room property will be rebranded as Citadines Connect Sydney Airport upon completion of the acquisition in May; Ascott willl manage the property. This will be Ascott REIT’s first business hotel in Australia and its first property to be managed by its sponsor, The Ascott Limited, under the new Citadines Connect brand.
The acquisition will bolster Ascott REIT’s portfolio in Australia to more than 900 rooms across six properties. Ascott REIT currently owns three properties in Sydney: Quest Mascot, Quest Campbelltown and Quest Sydney Olympic Park, in addition to Citadines St Georges Terrace Perth and Citadines on Bourke Melbourne.
"This acquisition will deepen Ascott REIT’s presence in the stable and resilient market of Australia, adding to our portfolio a quality property that provides good yield in the highly sought-after Sydney market," said Bob Tan, Ascott Residence Trust Management Ltd.'s (ARTML) chairman. "Australia has consistently ranked as one of Ascott REIT’s top contributing markets in terms of gross profit. This acquisition will further strengthen our investment in developed markets, which collectively account for almost 80 percent of the asset value for Ascott REIT. Ascott REIT will continue to seek opportunities in key markets with strong corporate demand, such as Australia, Japan, Europe and the U.S., to deliver strong yield and growth in distribution income for our unitholders."
The accretive acquisition, with an EBITDA yield of more than 6 percent, will be funded by bank loans, divestment proceeds or a combination of both. In line with Ascott REIT’s strategy to redeploy capital and invest in higher-yielding assets, the earlier announced divestment of Ascott Raffles Place Singapore will provide Ascott REIT with the financial flexibility to acquire the Sydney property and enhance returns to unitholders.
"The target business hotel is adjacent to another property owned by Ascott REIT, the 91-unit Quest Mascot, which has been enjoying over 85 percent occupancy," said Beh Siew Kim, ARTML’s CEO. "It will enable us to leverage scale and increased operational efficiency from the clustering effect across these Ascott-managed properties. With this enhanced presence in the vicinity of Sydney Airport, Ascott REIT is not only well positioned to benefit from the growing transient traveler traffic, but more importantly, gain access to a significant number of transport and logistics-related national corporate accounts, as well as to capture demand from the growing industries in its neighboring suburbs."
Another Citadines Connect is slated to open in New York City. Ascott is also looking to rebrand its properties such as the Temple Bar Hotel Dublin in Ireland and The Domain Hotel Sunnyvale in Silicon Valley, Calif., to Citadines Connect.