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CapitaLand, QIA JV makes maiden London deal

The two firms have made the third investment from their $600 million global serviced residences fund  

CapitaLand and Qatar Investment Authority (QIA) have jointly acquired an apartment hotels building in London for £52 million (€70 million; $76 million).

The deal is the first property buy in London 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 108-unit property is located in Islington and will be named Citadines Islington London after its scheduled completion in 2019.

“Ascott’s fund with QIA provides the financial boost to support our acquisitions and growth as Ascott gears up to achieve our global target of 80,000 apartment units by 2020,” said Lee Chee Koon, the firm’s chief executive officer. “The addition of Citadines Islington London will strengthen Ascott’s position as one of the largest international serviced residence operators in Europe, with an asset size of over S$1.5 billion.”

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.

Following this acquisition, Koon said Ascott’s portfolio in the region will increase to more than 5,300 units in 45 properties across France, United Kingdom, Belgium, Germany, Georgia and Spain. The firm plans to double its portfolio in Europe to 10,000 units by 2020.

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.