(16 Jun 2021)
Ascott and its hospitality trust, Ascott Residence
Trust (ART), are to invest and develop a freehold student
accommodation asset located in South Carolina, USA for an expected
total amount of US$109.9 million (S$146.2 million).
student accommodation will serve over 35,000 undergraduate and
graduate students from the nearby University of South Carolina
Construction of the student accommodation is
scheduled to start in Q2 2021 and complete in Q2 2023.
At the initial stage, Ascott and ART will jointly
invest in the asset to own a 45% stake each. A third-party partner,
which is a joint venture between one of the largest student
housing developers in the USA and a large national real estate
developer and contractor based in the USA, will own the remaining
10% stake for alignment of interest. When the property’s
performance stabilises, Ascott and ART will acquire the remaining
share from the third-party partner.
Ascott has also formed a
partnership with the student housing developer to invest and
develop more student accommodation properties in the USA. These
properties could become a potential pipeline for ART from its
The accretive investment in this maiden asset in
South Carolina, is expected to increase ART’s pro forma FY 2020
Distribution per Stapled Security (DPS) by about 2.1%. Upon stabilisation, the EBITDA yield is expected to be approximately
6.2%3. ART will also have the priority to fully acquire the
student accommodation asset from Ascott to generate greater stable
returns for ART’s Stapled Securityholders.
Ms Beh Siew Kim, Chief Executive Officer of
ART Management Limited and Ascott Business
Trust Management Pte. Ltd. (the Managers of ART), said, “The
acquisition of our second student accommodation asset is in line
with ART’s strategy to grow our longer-stay portfolio to further
enhance income stability and create greater value for our Stapled Securityholders. Student accommodation have leases that typically
last for a year and its countercyclical nature further strengthens
the resilience of ART’s portfolio against any short-term
“This latest acquisition follows
ART’s agreement to
purchase three rental housing properties in Sapporo, Japan as well
as our first student accommodation asset Paloma West Midtown in
Georgia, USA. It will expand our student accommodation and rental
housing portfolios to about 9% of our total property value. We
aim to increase it to about 15-20% in the medium term.
with our sponsor, Ascott allows ART to tap on their expertise and
experience, while generating a higher yield when the property
turns operational by participating in the development of the
asset. With this investment, ART will remain within the 10%
regulatory limit on property development for REITs.”
Premium Student Living Steps Away from
The freehold purpose-built student accommodation
asset will offer 678 beds across 247 units and is close to a
plethora of food and entertainment options.
It will provide fully
furnished studios as well as one to five-bedroom apartment units,
each of which will come with a fully equipped shared kitchen, as well as
appliances such as a washer and dryer.
Community amenities include
a fitness centre, study lounges, a coffee bar, and jumbotron TV on
an elevated amenity deck with swimming pool and cabanas.
property will be managed by an affiliate of one of the members of
the third-party partner.
Expanding Ascott Residence Trust’s
In January 2021, ART expanded its investment
mandate to include student accommodation to enhance the stability
of its portfolio and diversify its portfolio beyond traditional
In February 2021, ART acquired Paloma West Midtown
for US$95 million (S$126.3 million) at an expected EBITDA yield of
about 5%. Paloma West Midtown enjoys high occupancy rate of
Less than a five-minute walk to the Georgia
Institute of Technology (Georgia Tech), the 525-bed
accommodation serves close to 40,000 undergraduate and graduate
students of Georgia Tech. The asset is also within walking distance to
Georgia Tech’s upcoming Technology Enterprise Park, a 2.2 million
square feet research and commercial hub which will drive up
economic activities and general rent levels around the district.
ART also recently entered into agreements to
acquire three freehold rental housing properties in Sapporo, Japan
for a total of JPY 6.78 billion (S$85.2 million). The average
EBITDA yield of the three acquisitions is approximately 4%. On a
FY 2020 pro forma basis, ART’s DPS is also expected to increase by
2.6%. The transactions are expected to complete by end June 2021.
The three rental housing properties are the 126-unit City Court
Kita 1 jo, 158-unit Big Palace Minami 5 jo, and 127-unit Alpha
Square Kita 15 jo.
In addition to the two student accommodation
assets, Ascott and ART own five other hotels with over 1,200 units
in the USA.
Ascott also owns a majority stake in Synergy
Global Housing (Synergy), a leading accommodation provider in the
market, which offers apartments for corporate lease. Synergy has
over 1,800 units in the USA, with a strong presence in the West
Coast, including Los Angeles, Orange County, San Diego, Seattle as
well as New York.
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