CAPITALAND

CAPITALAND: Its service residence arm, The Ascott Ltd announced plans to grow its global portfolio by more than 50% to 40,000 apartment units from the current 26,000 by 2015. The division also hopes to contribute more significantly to the group’s earnings to account for as much as 20% from the current 10%. Looking at Ascott's rate of growth, we believe the target is achievable as it will be rolling out about 3,100 apartments this year alone.

Of these, some 1,600 units across seven properties will be ready in the second half, in countries such as China and Indonesia. While much of the envisioned growth will come from China, mgtm reckons that South-east Asia is likely to be the next fastest growing market for Ascott. India and Europe are also on Ascott's radar. It could enter Italy, Switzerland, Turkey and the east European countries.

In terms of capex, Ascott will invest some $50m to refurbish more than 10 of its properties in Asia and Europe over the next 12 mths. This is on top of around $20m it has put in to renovate some properties such as Somerset Liang Court. We think that Ascott may try to obtain capital for growth from private equity funds, such as the Ascott China Fund. It could also sell assets to Ascott Residence Trust for funds to re-invest.