By James Wilkinson at the 2014 Quest Conference
Singapore-based The Ascott Limited is investing AUD$500 million in Quest Serviced Apartments in a move that’s set to rapidly accelerate the chain’s expansion plans.
Speaking exclusively to HM on camera at the 2014 Quest Conference in Melbourne today (Oct 23), Quest CEO, Zed Sanjana, said deal included AUD$500 million set aside for future growth through new properties over the next five years, the acquisition of several existing assets and the potential to grow internationally.
“We’re very excited to announce the partnership,” he said, adding the capital would result in around 20 new properties, on top of 16 Quest properties that are currently under construction.
Sanjana said Quest had been in exclusive negotiations with The Ascott Limited since June and now “together we will be able to leverage the Quest brand” both in Australasia and internationally.
“Our aspirations are to take the Quest brand global,” he said. “It’s always been a brand we can transport globally.”
Sanjana said the partnership included Ascott Residence Trust (a listed Real Estate Investment Trust on the Singapore Exchange) acquiring a AUD$83-million portfolio of Australian Quest assets, including three New South Wales properties at Sydney Airport, Sydney Olympic Park and Campbelltown.
He said they would continue to be operated and leased back long-term under the Quest brand and franchise platform and in addition, Ascott will become a minority JV partner within Quest.
Sanjana said the strategic partnership “was a transformational opportunity for Quest; which would result in both accelerated growth of the brand’s Australian footprint, as well as fast tracking Quest’s global expansion”.
“This will provide us with an opportunity to accelerate our organic growth over the next five years to take advantage of the strong demand dynamics in the Australian accommodation market,” he said.
“We will now move quickly to close out a number of deals in our pipeline, by providing greater certainty to our development partners.
“The AUD$500 million future commitment by The Ascott Limited and portfolio acquisition by Ascott Residence Trust, demonstrates the growing investment appetite in this asset class from global institutional investors, and their confidence in the strength of the Australian accommodation market.”
In a statement to the Singapore Exchange this morning (Oct 23), The Ascott Limited CEO Lee Chee Koon said, “Ascott has an established presence in Australia where our serviced residences enjoy a strong demand from travellers to the country, and we see vast potential growth opportunities for serviced residences.
“Ascott has many global customer accounts and strong global systems to manage our properties.
“Through our strategic partnership with Quest, we can leverage each other’s knowledge and contacts in Australia to rapidly extend our presence in the growing market for international quality serviced apartments.
“We also expect a stronger pipeline of properties in Australia for Ascott to acquire.
“Foreign investment in Australia’s accommodation sector has been on the increase in recent years due to the reliable legislative environment, resilient economy and stable returns in Australia.
“We look forward to closer collaboration with Quest in cross selling, conducting joint marketing initiatives, and jointly exploring franchising opportunities outside of Australia,” Lee said.
At the 2014 Quest Conference, Sanjana also announced Quest Serviced Apartments had set up an advisory board made-up of high-profile business leaders, including former Chairman of Tourism Accommodation Australia, Tony South, former Chairman of McDonald’s Australia, Peter Ritchie, and EY Partner, John Selak.
To view the exclusive video with Sanjana, click on the YouTube image at the top of the page.