The Ascott has entered into a 50:50 joint venture with Qatar Investment Authority to set up a US$600 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 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.
Lim Ming Yan, president Ascott-parent CapitaLand, 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 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.”
Lim added: “As real estate capital values rise with the growing intensity of competition for assets, CapitaLand’s deep presence in many key gateway cities, our strong fund management expertise across various asset classes, from integrated developments, residential, shopping malls to serviced residences as well as our established developer- owner-operator capabilities, will allow us to deliver better risk-adjusted returns for investors.
“CapitaLand’s strong balance sheet and stable of REITs also give us the ability to stay invested for the long term in assets with longer gestation periods.
“This, together with our ability to co-invest with our capital partners, aligns us with capital partners with longer investment horizon such as sovereign wealth funds, pension funds and insurance companies.”
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 US$300 million of equity funds to the joint venture.
The fund will invest in serviced residences or rental housing properties with an initial focus on the Asia Pacific and Europe regions, for a term of ten 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.
Subject to pre-existing contractual obligations that Ascott has, the fund will have exclusive rights over deals that are available to Ascott during the fund’s investment period.
The joint venture will also grant Ascott a first right to manage the properties that it acquires.
Ascott currently manages a US$500 million Ascott China Fund that invests in serviced residences across China and it was fully invested by 2011.
To date, Ascott China Fund has already divested six out of 11 of its assets, which constitutes about 60 per cent of its invested capital.
Ascott also manages a JPY12.6 billion ARC CapitaLand Residences Japan Fund that invests in rental housing properties in Japan.
CapitaLand manages private equity funds which are invested in its Raffles City developments in China, retail malls across China, India and Japan, as well as residential and township projects in China.