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CapitaLand, QIA JV makes Australian debut

The acquisition via their $600m global serviced residences fund is the first acquisition in Australia and fourth within a span of seven months.

CapitaLand and Qatar Investment Authority (QIA) have jointly acquired its first serviced residence building in Melbourne for A$71 million ($54 million; €49 million).

The deal is the fourth property for the Singapore-based real estate firm's serviced residence owner-operator business, Ascott, and the Middle Eastern sovereign wealth fund via the $600 million Ascott Serviced Residence (Global) Fund.

The closed-ended real estate fund was launched as a 50:50 partnership between the two groups in July 2015 with plans of deploying the fund corpus into value-add investments in the serviced residences or rental housing sector predominantly in Asia Pacific and Europe.

The 221-unit property will be leased to Quest Apartment Hotels, one of the largest serviced apartment operators in Australia, as part of wider strategic partnership.

Under the partnership, Ascott will invest up to A$500 million in new properties that Quest will secure for its franchise in Australia until 2019. Ascott has a right of first refusal to acquire the properties sourced by Quest. Quest will provide a lease for the properties, which will be operated under franchises using the Quest brand. In addition, Ascott has acquired a 20 percent stake in Quest, with an option to increase it to 30 percent.

“Ascott's $600 million equity joint venture fund with QIA has boosted our capacity to invest and grow quickly. This property in Melbourne is our first acquisition in Australia in partnership with QIA and our fourth within a span of seven months,” commented Lee Chee Koon, Ascott's chief executive.

“We expect these strong partnerships to gather more momentum as we pursue Ascott's target of 80,000 apartment units globally by 2020.”

Ascott's four acquisitions made in partnership with QIA have a total investment amount of $270 million and would be funded partly by debt.

The JV made its first investment from the fund in November last year when it invested a total of $137 million to acquire two properties in Tokyo and Paris. An additional investment of $33 million via the fund will be made to convert the Paris property, an office building, into a 70-unit luxury serviced residences unit; and some will go toward the asset enhancement of the 50-unit residential property in Tokyo.

The pair followed this acquisition up with the purchase of a 108-unit  apartment hotels building in London for £52 million back in April.

The partnership with QIA is part of CapitaLand's stated plans of expanding its fund management business. The group indicated in early 2015 that it plans to launch six more private equity real estate funds with total assets valued at approximately $6 billion.