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Joint venture sees Ascott set up S$800 million serviced residence fund

The Ascott Limited (Ascott), CapitaLand Limited’s wholly owned serviced residence business unit, has entered into a joint venture with Qatar Investment Authority (QIA) to set up an S$800 million serviced residence fund.
With an initial focus on the Asia Pacific and Europe regions, this is Ascott’s largest private equity fund to date. With a target to launch six new funds with total assets under management (AUM) of up to S$10 billion by 2020, this joint venture is part of CapitaLand’s efforts to further grow its fund management business and pursue market opportunities with a stable of blue chip capital partners.

CapitaLand is the largest fund manager in Asia Pacific and ranked no.12 globally based on total real estate AUM it managed in 2014.  

Mr Lee Chee Koon, Ascott’s CEO, said: “Ascott is adopting a co-investment approach in this 50:50 strategic partnership with QIA as a testament of our strong alignment of interest with our capital partners. As Ascott steps up investments to expand our presence globally, this serviced residence fund will provide the financial backing to support our acquisitions, and accelerate Ascott’s growth to achieve our target of 80,000 apartment units globally by 2020.   

“We will also be able to increase our fee-based income as Ascott has the first right to manage the properties that the fund acquires. We look forward to the many attractive opportunities ahead to put this capital to good work, as we build a long-term partnership with QIA.”  

QIA is a global investment institution and a preferred partner of choice for investors, financiers and other stakeholders. Through the partnership in serviced residences, Ascott and QIA will each contribute S$400 million of equity funds to the joint venture.  

The fund will invest in serviced residences or rental housing properties in Asia Pacific and Europe, for a term of 10 years with an investment period of three years. It will invest in development, redevelopment and turnkey opportunities, as well as acquire suitable projects for asset enhancement, repositioning or conversion into serviced residences and rental housing properties. The fund will have exclusive rights over deals that are available to Ascott during the fund’s investment period, subject to pre-existing contractual obligations.  

Mr Lim Ming Yan, President & Group CEO of CapitaLand Limited, said: “Real estate is a capital intensive business and fund management is central to the active capital management strategy of CapitaLand as a dominant real estate player. This tie-up with QIA is a good example of how we are proactively working with strong capital partners to build up scale.   

“With Ascott’s newly set up global serviced residence fund, CapitaLand now manages 17 real estate private equity funds and five real estate investment trusts (REITs) with AUM worth over S$43 billion.  This Ascott global serviced residence fund brings us a step closer towards our goal of raising five to six funds with total AUM of S$8-10 billion by 2020.”

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