Ascott may launch yuan REIT

The Ascott, the serviced-apartment arm of CapitaLand, is considering listing a China-focused real estate investment trust (REIT) to fund its expansion in the world’s second-largest economy.

Ascott Chief Executive Chong Kee Hiong said in an interview with Dow Jones Newswires: “We continue to like China, although we would have to wait for good opportunities in first-tier cities. We also like the second- and third-tier cities. Their economies will still grow despite the slowdown in the overall economy.”

The comments from the world’s largest owner and operator of serviced apartments point to its confidence in the long-term potential of China’s extended-stay hospitality sector, even as a slowdown in the economy has discouraged some foreign investors.

To fuel growth, Ascott could list a yuan-denominated REIT and launch new region-focused private funds to add to its existing Ascott Residence Trust and Ascott China Fund, Mr Chong said, without specifying the size of the possible REIT or funds.

“When we have sufficient assets in China and when China opens up a REIT regime, (listing a REIT in China) would be a possibility,” he said.

In recent years, Beijing has considered allowing REITs as an alternative financing tool for developers, but its fragmented tax and legal regimes have hampered efforts in this direction. Even so, Ascott could list a China-focused REIT in Singapore with its units tradable in yuan and Singapore dollars, Mr Chong said.

Source : Today – 17 Oct 2012

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