Ascott Residence Trust (Ascott REIT) is expanding its footprint Down Under by acquiring a limited-service business hotel near Sydney Airport for AUD60.6 million (USD42 million).
The 150-room freehold property is currently known as Felix Hotel, but will be re-branded by the REIT as Citadines Connect Sydney Airport once inducted into its portfolio in May 2019.
Once inducted, Ascott REIT’s presence across Australia will comprise of 900 units across six properties.
As reported by REITsWeek in late-January 2019, Ascott REIT has indicated that it would be focusing on developed countries for its acquisitions.
“The target business hotel is adjacent to another property owned by Ascott REIT, the 91-unit Quest Mascot which has been enjoying over 85% occupancy”, said Beh Siew Kim, CEO of the REIT’s manager.
“It will enable us to leverage [on] scale and increased operational efficiency from the clustering effect across these Ascott-managed properties”, she added.
“With this enhanced presence in the vicinity of Sydney Airport, Ascott REIT is not only well positioned to benefit from the growing transient traveller 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 neighbouring suburbs”, said Beh.
The acquisition is expected to be yield-accretive, with an EBITDA yield of over 6%.
The property’s purchase will be funded by bank loans, divestment proceeds, or a combination of both, said the REIT.[else]