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CapitaLand to combine Ascott Reit and A-H Trust

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CapitaLand will combine Ascott Residence Trust (Ascott Reit) and Ascendas Hospitality Trust (A-H Trust) to make the largest hospitality trust in the Asia- Pacific and the eighth biggest globally.

The combined entity will have a total asset value of $7.6 billion, it was announced yesterday.

The merger creates a portfolio of 88 properties with more than 16,000 units in 39 cities and 15 countries across the Asia- Pacific, Europe and the US.

It will also diversify Ascott Reit's global portfolio and give it a presence in Brisbane and Seoul.

"With access to a larger capital base and a higher debt headroom of about $1 billion, we will have greater financial flexibility to seek more accretive acquisitions and value enhancements," said Mr Bob Tan, the chairman of Ascott Residence Trust Management.

"The combined entity can then ... potentially enjoy a positive re-rating of the unit price and gain a wider investor base, which would be beneficial to all our unitholders."

The consideration for the proposed merger is about $1.2 billion, comprising $61.8 million in cash and 902.8 million new units of the new entity.

Through a trust scheme of arrangement, Ascott Reit will acquire all A-H Trust units for $1.0868 apiece, comprising $0.0543 in cash and 0.7942 Ascott Reit-BT units issued at $1.30.

The merger follows calls from activist fund Quarz Capital Management, a long-term shareholder of A-H Trust, to merge both entities.

CapitaLand group chief executive Lee Chee Koon had told shareholders in April that one of the ways to resolve the conflict in the two trusts' overlapping mandates was through a merger.

CapitaLand shares closed up 1.38 per cent at $3.68, Ascott Reit closed down 2.3 per cent to $1.28 and A-H Trust closed up 6.7 per cent at $1.04.