Ascott Residence Trust has agreed to acquire a 1,005-bed student accommodation asset in Texas for US$70 million, or around S$93.8 million, marking its third investment in the sector in the past seven months, the trust said in a filing to SGX Thursday.
The property, named Wildwood Lubbock, houses undergraduates and graduate students from Texas Tech University, with the beds spread across 294 units, comprising two- and four-bedroom apartments, all with ensuite bathrooms, the filing said. An independent valuation dated 7 September by Colliers International Valuation and Advisory Services had valued the property at US$72 million, the filing said.
The deal will be partially financed with the proceeds of a private placement, ART said.
Beh Siew Kim, CEO of ART’s manager, said the deal was in line with the trust’s strategy to acquire assets with longer lengths of stay and diversify its portfolio from traditional hospitality properties.
“Leases are typically for a year and Wildwood Lubbock will start contributing income immediately. Despite Covid-19, Wildwood Lubbock is 100 percent leased for the 2021 academic year and there is minimal upcoming private student accommodation supply,” she said in the statement.
She said the acquisition would increase ART’s longer-stay portfolio to about 11 percent of its assets, in line with its goal of having student accommodation and rental housing properties at around 15-20 percent of the total property value of the portfolio.
ART has committed to invest around S$379 million on three U.S. student accommodation assets and three rental housing properties in Sapporo, Japan, she noted.
“ART continues to be in a strong financial position to seek accretive investments in more longer-stay lodging assets,” Beh said.
On a pro forma basis, the acquisition would have increased ART’s distribution per stapled security by 1.5 percent and to post earnings before interest, taxes, depreciation and amortisation (ebitda) of US$3.6 million, translating to an ebitda yield of 5.1 percent, the filing estimated.
The deal is expected to be completed on 21 September, the filing said.
In February 2021, ART had acquired the Paloma West Midtown student accommodation in Atlanta, Georgia for US$95 million, and in June, it said it would invest jointly with its sponsor in a South Carolina student accommodation asset for US$55.2 million, the filing said.