Singapore-based The Ascott Limited has increased its investment in Quest Apartment Hotels by 60% in a deal worth AUD$180 million.
The top-up acquisition, giving Ascott 80% of the company, extends a major strategic partnership between the two businesses announced three years ago, at which time Ascott invested in a 20% stake of Quest.
Quest Founder and Chair, Paul Constantinou, will retain 20% shareholding in the business, and will remain Chair for the next five years, maintaining responsibility for the direction of the growth of the business.
Constantinou, said the investment sees Quest now joining one of the world’s leading serviced residence networks, offering Quest guests the benefit of true global reach across 29 countries in the Americas, Asia Pacific, Europe and the Middle East.
“Quest will now further leverage the strength of Ascott’s globally recognised, award-winning brands and fast track its international expansion, whilst maintaining its successful franchise format business, along with the value and integrity of the Quest brand,” Constantinou said.
“The company now has the capability to offer customers a true global accommodation solution for both transient and extended stay requirements, and will allow Quest to fast track the growth of the brand as a unique franchising platform into global markets.”
Ascott is a wholly-owned subsidiary of Singapore-listed company, CapitaLand Limited, one of Asia’s largest real estate companies and operates under five international brands: Ascott, Citadines, Somerset, The Crest Collection and lyf.
Ascott has over 300 properties globally, including 10 in Australia.
Ascott’s Chief Executive Officer, Lee Chee Koon, said increasing the company’s stake in Quest to become its majority shareholder, will leapfrog Ascott to become the leading serviced residence provider in Australasia.
“This acquisition will give Ascott an instant boost of over 11,000 units in Australasia. Scale is important for us to offer more options to customers, strengthen our sales and distribution, and help speed up Ascott’s growth,” he said.
“Besides entrenching Ascott’s presence in the developed and stable market of Australia, we will be able to capitalise on the established Quest brand and its highly scalable business format franchise systems and know-how, and further apply the franchise platform as a driver of growth for Ascott.
“Quest also has a strong talent bench that could contribute to Ascott’s global expansion plan,” he said.
In addition, Ascott has acquired its first serviced residence in Brisbane as part of its strategic partnership with Quest.
The 100-unit freehold property – to be named Quest Cannon Hill when it opens next year, will be developed on a turnkey basis by an unrelated local property developer for AUD$24 million.
Quest Cannon Hill is the second acquisition under Ascott’s strategic partnership with Quest. In mid-2016, Ascott acquired the 221-unit Quest NewQuay Docklands in Melbourne for $71 million – which will be Quest’s largest property in its network when it opens in 2019.
“With Ascott’s investment in Quest, we can count on our joint capabilities to tap more pipeline opportunities for turnkey delivery of new-build projects as well as ready-operating properties with incumbent leases in Australasia,” Lee said.
“Franchise, management contracts, investments, and strategic alliances will continue to be key strategies to solidify Ascott’s lead as we work towards exceeding our target of 80,000 units globally by 2020.”