Far East Orchard acquires three UK student-housing properties for around S$99 million

Vintage U.K. five pound noteVintage U.K. five pound note

Far East Orchard said on Saturday it acquired a portfolio of three student-accommodation properties in Liverpool and Bristol, in the U.K., for £55.0 million, or around S$98.7 million.

The properties have a total of 622 beds: 299 in Bristol and 323 in Liverpool, Far East Orchard said in a filing to SGX on Saturday.

“All three properties enjoy strong occupancy due to favorable supply-demand dynamics and their proximity to university campuses and the city center,” the filing said, adding that Bristol has two major universities and Liverpool has four higher education institutions.

The acquisition brought Far East Orchard’s portfolio of purpose-built student accommodation to 2,091 beds across eight U.K. properties, the filing said. It said it was funded via internal resources and external debt facilities.

Lui Chong Chee, group CEO and managing director, noted that Far East Orchard entered the U.K. student housing sector in 2015 by acquiring sites in Newcastle upon Tyne, and later expanded into Brighton, Bristol and Liverpool.

“Our latest acquisition of three stabilized properties in established U.K. university cities is part of our strategy to enlarge our recurring income base, thereby reinforcing the group’s resilience,” Lui said.

He added that Far East Orchard was targeting increasing the student-accommodation portfolio to 3,000 beds by 2023. The company is developing a 193-bed property, called Hollingbury House, in Brighton, which is scheduled to be completed this year, the filing said.

The company said student housing tends to be “counter-cyclical” and that despite Brexit, demand for it is expected to remain strong in the U.K. due to the reputation of the country’s higher education system.

On a pro forma basis, if Far East Orchard had acquired the three properties on 1 January 2018, earnings per share would have been 8.15 Singapore cents, compared with 7.64 Singapore cents without the acquisition, the filing said.

The newly acquired properties will be managed by the facility manager of Far East Orchard’s existing student accommodation portfolio in Newcastle upon Tyne in the U.K., it said.

The sellers of the three properties were Victus (Guernsey) 2 Ltd., Victus (Guernsey) 4 Ltd., and Victus (Guernsey) 6 Ltd., the filing said.

Get the Shenton Wire morning briefing in your inbox