The Ascott Group, an international serviced residence company, has entered into an agreement to acquire 50 per cent interest in Citadines, a pan-European serviced residence chain. Ascott will invest E84.2m (S$147.5m) in the Citadines Group, which has over 5,100 serviced apartments in 46 properties in 18 cities across France, the UK, Belgium, Spain and Germany.

The acquisition brings Ascott closer to its goal of becoming a global serviced residence company with strong international brands. The acquisition increases Ascott's collection of properties to 117 serviced residences with over 13,500 units in 37 cities. Previously, Ascott had over 8,400 serviced apartments in 20 cities in Asia, Australasia and the UK.

The Transaction

The transaction involves Ascott acquiring 50 per cent of the equity in the Citadines Group, with a call option to acquire the remaining 50 per cent stake by end May 2004. The acquisition price of E84.2m (S$147.5m) is based on 50 per cent of Citadines' gross enterprise value of E401.4m (S$703m), representing nine times Citadines' FY2001 EBITDA, less its debt and minority interests of E233.0m (S$408.1m).

If the call option is exercised before end June 2003, the price will be computed on the gross enterprise value of E401.4m. If the call option acquisition occurs after June next year, the price will be based on a gross enterprise value that is the higher of E401.4m or 10 times Citadines' EBITDA over the last 12 months.

The acquisition, which will be funded through cash and borrowings, is subject to Ascott shareholders' approval at an EGM to be convened. CapitaLand Limited, which owns 68.9 per cent of Ascott shares, has provided an irrevocable undertaking to vote in favour of the acquisition.

The Citadines Group is jointly owned by The Whitehall Street Real Estate Funds and Westmont Hospitality. The Whitehall Funds are sponsored and managed by Goldman, Sachs & Co. Westmont, the fifth largest hotel owner and operator in the US, holds ownership interests in and manages over 350 hotel properties worldwide.

Expanding in Europe

Mr Liew Mun Leong, Ascott's deputy chairman, and president and CEO of its parent company, CapitaLand Limited, said: "The acquisition presents a unique opportunity for Ascott to establish a foothold in the European serviced residence market. It also serves as an excellent platform for Ascott's further expansion into Europe. "The two-stage acquisition is ideal as Ascott will be able to phase into Europe, drawing on the expertise and local knowledge of Citadines' strong operational team." He added: "Citadines enjoys strong brand recognition in Europe. The mid-tier marque complements Ascott's 'Somerset' and 'The Ascott' brands which serve the upper and luxury ends of the serviced residence market. The 'Citadines' brand could potentially be rolled out to properties beyond Europe, such as in China and Australia." Ascott's chief executive officer, Mr Kee Teck Koon, said: "The acquisition price at nine times EBITDA represents good value, given Citadines' established customer base and its prime property locations in European gateway cities and business centres. "Citadines' properties have a strong performance track record. Last year, they achieved an average GOP margin of 67 per cent and EBITDA yield of 11 per cent, despite the dampening effects of the September 11 terrorist incidents."

Strengthens Earnings Base

Mr Kee said that the acquisition will also strengthen the quality of Ascott's earnings and income stability. "As a result of the acquisition, we will have greater diversification across geographic markets, with a higher proportion of our earnings coming from developed countries. Our capital allocation in mature economies will increase from 64 to 70 per cent."

About Citadines Apart'hotels - Citadines Apart'hotels is the dominant City based extended-stay brand in European Capitals offering consistent extended stay accommodation, serving primarily the mid-priced corporate market.

Citadines provides fully equipped, comfortably furnished apartments - generally studios or one-bedroom apartments - combined with à la carte services. The Apart'hotels offer a modern alternative and more economical way of staying in the heart of the city and enabling independence for one night, a few days or several weeks.

For additional informatiCentre based "extended stay" brand in European Capitals ne-on about Citadines Apart'hotels please contact our call center + 33 1 41 05 79 05 or visit our website www.citadines.com.

Ida Lim
(65) 6586 7230
The Ascott Limited