Ascott may float Malaysian assets

The Ascott Group, the hospitality arm of CapitaLand Ltd, may float its assets in Malaysia into Ascott Residence Trust (ART), a real estate investment trust (REIT) listed in Singapore.

It currently owns and/or manages three serviced residences in Malaysia - Ascott Kuala Lumpur; Somerset Seri Bukit Ceylon, Kuala Lumpur; and Somerset Gateway, Kuching, Sarawak.

By end-2010, it will manage and own Somerset Ampang, which is being built for RM112.5 million.

Under its corporate leasing division, it manages 68 apartment units in two properties - Seri Bukit Ceylon Residence, Kuala Lumpur and Marc Service Suites, Kuala Lumpur.

It will manage 151 units of Tiffini by i-Zen in Mont' Kiara, Kuala Lumpur, developed by Ireka Group and due for completion by the first half of 2010.

Ascott International Management (2001) Pte Ltd senior vice president (operations) Alfred Ong said it is experiencing strong and stable performance at the properties.

"They have been performing well with occupancy of 80 to 90 per cent over the last two years and are suitable to be injected into the trust," Ong told Business Times in Singapore recently.

Launched in 2006, ART has a combined portfolio of S$1.5 billion (RM3.6 billion) as at June 30, 2008, comprising 37 serviced residences and rental housing properties across seven countries.

It is the first Pan-Asian serviced residence REIT set up to invest primarily in income-producing real estate like serviced residences and rental housing.

Ong said the group is on constant look-out for more opportunities in Malaysia to grow its presence.

"Our business in Malaysia is strong. Our occupancy and rates for our properties are above market, which gives us reasons to want to size up the locations and the properties," he said.

Ong said the group, which has invested RM193.7 million in Malaysia since 1998, is keen to explore potential in Penang, in Johor's Iskandar Region and in Petaling Jaya, Selangor.

"We are looking for more management contracts to manage residences for owners. We are negotiating for a few contracts in Kuala Lumpur and hope to seal a deal or two by the end of this year," he said.

Ong said the group is also looking for equity participation, which may involve land acquisition. It will work with local joint ventures or farm out building projects, he added.

By New Straits Times (by Sharen Kaur)