Ascott Reit buy Sydney airport hotel for $60.6 million

Ascott Residence Trust (Ascott Reit) has bought Felix Hotel, for $60.6 million.

The prime freehold limited-service business hotel is located close to Sydney Airport and will be rebranded as Citadines Connect Sydney Airport upon completion of the acquisition in May 2019.

The property will be Ascott Reit’s first business hotel in Australia and its first property to be managed by its sponsor, The Ascott Limited (Ascott) under the new Citadines Connect brand.

The 150-room property was completed and opened in February 2018.

Located in Mascot, it is within walking distance to the Mascot railway station and Sydney Airport, which catered to around 44.4 million passengers in 2018 and is forecast to receive around 60.7 million passengers by 2035.

The acquisition will bolster Ascott Reit’s portfolio in Australia to over 900 units across six properties.

Ascott Reit currently owns three properties in Sydney – Quest Mascot, Quest Campbelltown and Quest Sydney Olympic Park, in addition to Citadines St Georges Terrace Perth and Citadines on Bourke Melbourne.

Bob Tan, Ascott Residence Trust Management Limited’s (ARTML) Chairman, said the purchase was in line with its strategy to redeploy capital and invest in higher-yielding assets.

“This acquisition will deepen Ascott Reit’s presence in the stable and resilient market of Australia, adding to our portfolio a quality property that provides good yield in the highly sought-after Sydney market,” said Tan.

“Well supported by a range of industries, and a transparent and well-regulated business environment, Australia has consistently ranked as one of Ascott Reit’s top contributing markets in terms of gross profit.

“This acquisition will further strengthen our investment in developed markets, which collectively account for almost 80% of the asset value for Ascott Reit.

“Ascott Reit will continue to seek opportunities in key markets with strong corporate demand, such as Australia, Japan, Europe and the U.S., to deliver strong yield and growth in distribution income for our unit holders.”

Beh Siew Kim, ARTML’s Chief Executive Officer, said the property’s location was important.

“The target business hotel is adjacent to another property owned by Ascott Reit – the 91-unit Quest Mascot which has been enjoying over 85% occupancy,” Kim said.

“It will enable us to leverage scale and increased operational efficiency from the clustering effect across these Ascott-managed properties. 

“With this enhanced presence in the vicinity of Sydney Airport, Ascott Reit is not only well positioned to benefit from the growing transient traveller traffic, but more importantly gain access to a significant number of transport and logistics-related national corporate accounts, as well as to capture demand from the growing industries in its neighbouring suburbs.”