ASCOTT Residence Trust Ascott Trust: HMN -4.81% (ART) announced last week that it will acquire a student accommodation property in Texas, in the United States, which will be its third student accommodation asset investment this year.

 

While ART may be the first Singapore-listed trust to venture into student housing as S-Reits continue to diversify across property sub-segments, there are other Singapore-listed companies such as Singapore Press Holdings SPH: T39 0% , Far East Orchard Far East Orchard: O10 0% , Centurion Corporation Centurion: OU8 -1.49% , Wee Hur Wee Hur: E3B -2.53% , and Metro Holdings Metro: M01 0% that invest, own, and manage purpose built student accommodation assets (PBSA).

 

According to Knight Frank, global investments in PBSA reached a record US$16.3 billion in 2018.

 

Savills considers the PBSA sector to be counter-cyclical and notes in a report that it was one of the few asset classes that showed resilience during the global financial crisis in 2008.

 

In addition, data collated by Jones Lang Lasalle (JLL) has shown that over a third of deals for student housing in 2021 so far have been by private equity firms, as investors continue to seek exposure to alternative real estate sectors.

 

ART' s most recent acquisition is a freehold 1,005-bed student accommodation asset in Lubbock, Texas, for S$93.8 million. Wildwood Lubbock is a cottage-style property that is fully leased for the 2021 academic year and serves over 40,000 students from Texas Tech University.

 

The trust expects the acquisition to increase its pro forma FY2020 distribution per stapled security by approximately 1.5 per cent.

 

It also notes the longer average leases of student housing at one year, versus hotel stays.

 

ART has acquired four longer-stay accommodation assets this year, after expanding its strategy and diversifying its portfolio from traditional hospitality assets, further increasing its resilience and stable income.

 

Its two other student housing assets are in Atlanta (acquired in February 2021 for S$126.3 million) and South Carolina (acquired in June 2021 for S$73.4 million), both in the US.

 

In June 2021, ART also acquired three rental housing properties in Sapporo, Japan for S$85.2 million.

 

Following the acquisitions, ART' s rental housing and student accommodation properties will comprise about 11 per cent of its portfolio value, up from 5 per cent in end 2020. It has a medium-term target to expand it to 15 to 20 per cent.

 

CDL Hospitality Trust CDL HTrust: J85 +1.74% (CDLHT) in July this year has announced that it is revising its principal investment strategy to include rental housing, student accommodation and senior housing assets.

 

The trust sees the revision of its strategy as a way to bring more diversification to its portfolio, enhance income stability as tenants typically have longer lengths of stay compared to hotels, and expand its range of investment opportunities given its broader mandate.

 

Singapore Press Holdings (SPH) has a portfolio of 28 PBSA assets in the UK with a total of 7,723 beds under its brands Capitol Students, Student Castle, and Galileo Residenz.

 

Far East Orchard owns a PBSA portfolio in the UK comprising over 3,500 beds in the cities of Brighton, Bristol, Leeds, Liverpool, Newcastle-upon-Tyne and Sheffield.

 

Centurion Corporation has a PBSA segment with 19 assets in Australia, South Korea, the UK and US that accounted for 25 per cent of its revenue in H12021.

 

Wee Hur Holdings' PBSA business is undertaken via two of its funds which manage two operational assets, one asset pending operations and the rest at various stages of development.

 

Metro Holdings' PBSA portfolio consists of two properties in Warwick and Bristol, in the UK, and a 7.3 per cent investment in the Mapletree Global Student Accommodation Private Trust. 

Placement saw participation from new and existing institutional and other accredited investors, says Reit' s manager

 

ASCOTT Residence Trust (ART)' s private placement closed about two times covered and was priced at the bottom end of its price range, at 98.3 Singapore cents per new stapled security.

 

The private placement saw participation from new and existing institutional and other accredited investors, the managers of the real estate investment trust (Reit) said in a bourse filing on Friday.

 

ART had called for a trading halt on Thursday, prior to its announcement of the proposed private placement, and its units resumed trading on Friday.

 

ART units closed at 99 cents on Friday, down five cents or 4.81 per cent.

 

The stock is trading on a cum-dividend basis.

 

The issue price represents a 5.5 per cent discount to the volume-weighted average price (VWAP) of S$1.04 per stapled security, and 5 per cent discount to the adjusted VWAP of S$1.034 per stapled security based on trades in ART' s stapled securities on Sept 8 up to the time the placement agreement was signed on Sept 9.

 

On Thursday, ART' s managers said it would acquire Wildwood Lubbock, a 1,005-bed student accommodation asset in Texas, United States for US$70 million, and proposed a S$150 million private placement to partially fund the acquisition.

 

About S$58.7 million or 39.1 per cent of the gross proceeds will go towards partially funding the Wildwood Lubbock acquisition, while S$89 million or 59.4 per cent will be used to partially fund future potential acquisitions.

 

The remaining S$2.3 million or 1.5 per cent will be used to pay the estimated professional and other fees and expenses in connection with the private placement.

 

The Reit' s managers previously said the private placement will be targeted at institutional and other investors at an issue price of between S$0.983 and S$1.014 per new stapled security.

 

A total of 152,594,100 new stapled securities will be issued under the private placement, and trading of the new units on the Singapore Exchange is expected to commence on Sept 20.