Ascott Residence Trust Doubles Student Housing Assets with $ 290 Million Purchase
SINGAPORE (THE BUSINESS TIMES) – Ascott Residence Trust (ART) to acquire four student housing assets with a total of 1,651 beds in the United States for US $ 213 million (S $ 289.5 million), announced Monday December 27, the leaders of the stapled group. ).
Ascott Residence Trust Management and Ascott Business Trust Management highlighted that the yield-generating acquisition, which will double ART’s student housing assets, is expected to increase the hotel trust’s pro forma distribution by approximately 3% for fiscal 2020. by stapled title.
Earnings before interest, taxes, depreciation and amortization (EBITDA) are expected to be around 4.9%, they added.
The four mostly freehold assets are Link University City in Pennsylvania, Latitude in Hillsborough and Uncommon Wilmington in North Carolina, and Latitude in Kent, Ohio. They serve more than 100,000 students at five universities in three states in the United States.
The acquisition will be funded 92 percent by debt and 8 percent by the remaining proceeds of ART’s private placement launched in September.
When completed, managers said ART would have built a “high quality, diverse portfolio” of eight student housing assets with around 4,400 beds in less than a year.
Of the eight – which are primarily found in the US Sunbelt, Ivy League, and “Power 5” athletics conference markets – seven are operating assets that generate stable, new income with an average age of two. years, while one is under development.
The managers added that the portfolio’s concentration risk would be reduced now that assets are spread across seven states, with each state accounting for less than 23% of total beds.
Ms. Beh Siew Kim, chief executive officer of the trust, said ART has invested more in the sector given the favorable conditions in the overall student housing market in the United States.
She added that ART’s student housing assets in the United States have proven resilient throughout the Covid-19 pandemic.
Ms. Beh then provided an update on ART’s overall portfolio, noting that student housing and rental housing assets now represent around 16% of the total value of ART’s portfolio, exceeding its original target of 15%.
“We remain on track to take this long-term portfolio to 20% in the medium term, thereby creating a stable and substantial income base,” she said.