CapitaLand-QIA JV makes maiden investment

The two firms have invested a total of $137 million in two properties in Tokyo and Paris, both of which are to undergo substantial repositioning.  

CapitaLand, the Singapore-headquartered real estate developer and fund manager, and the Middle Eastern sovereign wealth fund Qatar Investment Authority (QIA) have made the first investment deals via their $600 million joint venture partnership.

The two firms have acquired two properties in Tokyo and Paris for a total of $104 million via the Ascott Serviced Residence (Global) Fund. The $600 million private equity real estate fund was launched in July this year as part of the 50:50 partnership established between QIA and Ascott, CapitaLand’s wholly-owned operator and developer of serviced apartments.

Both the properties are to undergo repositioning. In a statement announcing the investments, CapitaLand said an additional investment of $33 million will be made via the fund in part to convert the office building in Paris into a 70-unit luxury serviced residence called the Citadines Suites Champs-Élysées. A portion of the $33 million will also go toward asset enhancement at Somerset Shinagawa, a 50-unit serviced residence property in Tokyo. The total investment via the fund after taking into account the value additions will be $137 million.

“Ascott Serviced Residence (Global) fund’s maiden acquisitions are quality assets in key gateway cities where demand for serviced residences by expatriates and travelers remains strong. This is a testament of our strong alignment of interest with our capital partners,” said Lee Chee Koon, Ascott’s chief executive officer.

The Ascott Serviced Residence (Global) Fund is the firm’s largest private equity real estate fund to date. The closed-ended vehicle with a 10-year fund term was launched to make value-add investments in the rental housing or serviced residences sector. The initial focus of the fund is investments in Asia Pacific and Europe, particularly “development, redevelopment and turnkey opportunities”, as well as the acquisition of stabilized projects for asset enhancement, repositioning or conversion into serviced residences, according to a statement published at the time of the JV announcement.

“This value-added fund will capitalize on Ascott’s strong capabilities in developing, repositioning and enhancing the value of serviced residences globally. As we gear up to achieve Ascott’s expansion target of 80,000 units worldwide by 2020, the fund provides the financial boost to support our acquisitions and growth. With the first right to manage properties acquired by the fund, we will be able to increase Ascott’s fee-based income,” Koon added.

The five-story Citadines Suites Champs-Élysées is slated to open in 2018 while the Somerset Shinagawa in Tokyo is expected to compete refurbishment by year-end 2016.