12 | Ascott Residence Trust Annual Report 2014
9DOXH &UHDWLRQ
$FTXLVLWLRQ FULWHULD
In evaluating acquisition opportunities, Ascott Reit
BEPQUT UIF GPMMPXJOH DSJUFSJB
<LHOG WKUHVKROGV
Ascott Reit acquires properties or make investments
with yields that are currently, or have the potential to
be, above their cost of capital. Our acquisitions are
expected to enhance returns to Unitholders.
/RFDWLRQ
Ascott Reit evaluates properties in terms of their
micro-market locations, accessibility to major roads,
public transportation and proximity to amenities.
/RFDO PDUNHW FKDUDFWHULVWLFV
Ascott Reit acquires properties in markets with
positive macro-economic indicators such as strong
economic growth and expanding cross border
business investments and trade. Key considerations
include the levels of Foreign Direct Investment (FDI),
business travel (including intra-country business
travel), expatriate population and the resultingdemand
for serviced residences or rental housing properties.
9DOXH FUHDWLRQ RSSRUWXQLWLHV
Ascott Reit acquires properties with potential
for increase in occupancy rates and/or Average
Daily Rates (ADR). The potential for value creation
through Asset Enhancement Initiatives (AEIs) such
BT VQHSBEJOH SFGVSCJTINFOU BOE SFDPOmHVSBUJPO JT
also assessed.
%XLOGLQJ DQG IDFLOLWLHV VSHFLÀFDWLRQV
Ascott Reit acquires properties that comply with
BQQSPWFE CVJMEJOH TQFDJmDBUJPOT BOE MFHBM BOE
zoning regulations, with due consideration to the
size and age of the buildings.
2SHUDWRU RI WKH VHUYLFHG UHVLGHQFHV RU UHQWDO
housing properties
Before a serviced residence or rental housing
property is considered for acquisition, the operator
will be assessed for its track record in delivering
TUBCMF DBTI nPX BOE PQFSBUJPOT BOE PS JUT BCJMJUZ
BOE QPUFOUJBM UP BDIJFWF TUBCMF DBTI nPXT
$FWLYH $VVHW 0DQDJHPHQW
Ascott Reit creates value for its stakeholders by
maximising the operating yield of its property
portfolio and by focusing on the operational
performance of each property.
"T QBSU PG PVS GPDVTFE BOE QSPmU PSJFOUFE BQQSPBDI
we benchmark the operating results of each
property against market performance and against
its previous year’s results and planned budgets.
We also conduct detailed reviews of properties that
are not achieving their targets, and work closely with
the Serviced Residence Management Companies
(SRMCs) to develop action plans to improve the
operating performance of each of these properties.
We have put in place robust asset management
programmes that enable us to actively manage
each of our properties to generate organic growth
and strengthen existing relationships with key
customers. Through the SRMCs, we seek to
optimise occupancy levels and ADR, and maximise
RevPAU. As at end of FY 2014, approximately 80%
of Ascott Reit’s serviced residence properties have
undergone, or are undergoing AEI.
We closely monitor the growth potential of each
property, and divest properties that have reached
their maximum potential or whose growth prospects
are limited by changes in the operating environment.
*O
"TDPUU 3FJU NBEF JUT mSTU EJWFTUNFOUT TJODF
its initial listing. The divestment of Ascott Beijing and
Country Woods Jakarta unlocked the value of the
properties at 66% and 60% above each property’s
valuation as at 30 June 2010, with net gain of
S$98.1 million and S$77.8 million respectively. The
proceeds from the divestments were used to partly
fund the yield accretive acquisitions of Citadines
Mount Sophia Property Singapore, Somerset Hoa
Binh Hanoi as well as 26 European properties in
France, United Kingdom, Germany, Belgium and
Spain. In September 2012, Ascott Reit completed
the divestment of Somerset Grand Cairnhill
Singapore at 32% above the property’s valuation
as at 31 December 2011 with a net gain of S$77.8
million. The proceeds from the divestment were
deployed into yield accretive acquisitions of Ascott
3BGnFT 1MBDF 4JOHBQPSF BOE "TDPUU (VBOH[IPV
On 18 October 2013, Ascott Reit announced that
it had commenced strata sale for the divestment
of 81 units in Somerset Grand Fortune Garden
Property Beijing. As at 31 December 2014, we
have successfully sold six units to individual buyers
while sales for the remaining 75 units are currently
ongoing. The divestment will enable Ascott Reit to
unlock the underlying value of its units in Somerset
Grand Fortune Garden Property Beijing and
reconstitute its portfolio.
