Singapore Press Holdings acquired a portfolio of 14 student housing buildings in the U.K. across six towns and cities for around 180.5 million British pounds, or around S$321 million, from Unite Group PLC, it said in an SGX filing before the market open on Monday.
The portfolio of purpose-build student accommodation (PBSA) comprises 10 freehold assets and four leasehold assets and has a total capacity of 3,436 beds for student accommodation in established university cities and towns with large full-time student populations, including London, Birmingham, Bristol, Huddersfield, Plymouth and Sheffield, it said.
“This cash-yielding acquisition will generate recurring cash flow, and is part of our ongoing strategy to diversify our business to new growth areas,” Ng Yat Chung, CEO of SPH, said in the statement. “It will boost our real estate asset management portfolio, establish us as an overseas owner of PBSA in the U.K, and allow us to pursue other growth opportunities in this sector.”
SPH pointed to the asset class’ growth potential, citing 2017 data from real-estate services provider JLL indicating the U.K. national average for student housing is 2.8 students to each bed, with demand expected from both domestic and international students.
Around 300,000 more higher education places are expected to be needed in England by 2030, a 23 percent increase, to keep up with demand, according to a 2018 report from Higher Education Policy Institute cited by SPH to indicate the potential demand for its foray into the new property class.
The deal includes a rent guarantee capped at 2.5 million pounds, or around S$4.45 million, to cover any shortfall between estimated income and actual income at the assets as of 30 November, SPH said.
SPH also entered an operating management agreement with Victoria Hall Management (U.K.), a professional operator of student accommodation in the U.K., to manage the buildings, it said. The employees currently working at or in connection with the assets will be transferred to Victoria Hall, it said.
The transaction is expected to be completed on or around September 13, it said.
The acquisition was made through its wholly owned subsidiaries Straits One (Jersey) Limited, Straits Two (Jersey) Limited and Straits Three (Jersey) Limited, it said.