Ascott And Ascott Residence Trust Jointly Invest And Develop Student Accommodation Property In South Carolina, USA For US$109.9 Million

CapitaLand’s wholly owned lodging business unit, The Ascott Limited (Ascott) and its hospitality trust, Ascott Residence Trust (ART), will jointly invest and develop a freehold student accommodation asset located in South Carolina, USA for an expected total amount of US$109.9 million1(S$146.2 million2). The 678-bed student accommodation will serve over 35,000 undergraduate and graduate students from the nearby University of South Carolina (USC). Construction of the student accommodation asset is scheduled to start in 3Q 2021 and complete in 2Q 2023.

At the initial stage, Ascott and ART will jointly invest in the asset to own 45% stake each. A third-party partner, which is a joint venture between one of the largest student housing developers in the USA and a large national real estate developer and contractor based in the USA, will own the remaining 10% stake for alignment of interest. When the property’s performance stabilises, Ascott and ART will acquire the remaining share from the third-party partner. Ascott has separately formed a partnership with the student housing developer to invest and develop more student accommodation properties in the USA. These properties could become a potential pipeline for ART from its sponsor.

The accretive investment in this maiden asset in South Carolina, is expected to increase ART’s pro forma FY 2020 Distribution per Stapled Security (DPS) by about 2.1%3. Upon stabilisation, the EBITDA yield is expected to be approximately 6.2%3. ART will also have the priority to fully acquire the student accommodation asset from Ascott to generate greater stable returns for ART’s Stapled Securityholders.

Mr Kevin Goh, CapitaLand’s Chief Executive Officer for Lodging and Ascott’s Chief Executive Officer, said: “This transaction demonstrates Ascott’s ability to seek out and seize good investment opportunities to support our sponsored Ascott Residence Trust (ART) in creating sustainable value. Through our partnership with the leading local student housing developer, Ascott will gain immediate access to prime student accommodation assets in the USA. It allows us to combine our own global expertise in lodging and our partner’s expertise on the ground.

Ascott will continue to work with reputable partners to enlarge our student accommodation and rental housing portfolios in our target markets.”

“Ascott’s focus on the long-stay segment has enabled us to remain resilient amid COVID-19 and outperform our peers. As one of the world’s leading international serviced residence owner operators with an established rental housing portfolio, we are able to leverage our competitive edge to expand our suite of long-stay lodging products to now include student accommodation. This is in line with Ascott’s commitment to build a pipeline of stabilised long-stay assets for potential divestment to ART. We are seeking like-minded capital partners who look for good risk-adjusted returns through Ascott’s investment management expertise to further accelerate investments in the student accommodation asset class,” he added.

Ms Beh Siew Kim, Chief Executive Officer of Ascott Residence Trust Management Limited and Ascott Business Trust Management Pte. Ltd. (the Managers of ART), said: “The acquisition of our second student accommodation asset is in line with ART’s strategy to grow our longer-stay portfolio to further enhance income stability and create greater value for our Stapled Securityholders. Student accommodation have leases that typically last for a year and its countercyclical nature further strengthens the resilience of ART’s portfolio against any short

term volatility. This latest acquisition follows ART’s agreement to purchase three rental housing properties in Sapporo, Japan as well as our first student accommodation asset Paloma West Midtown4in Georgia, USA. It will expand our student accommodation and rental housing portfolios to about 9% of our total property value5. We aim to increase it to about 15-20% in the medium term. Partnering with our sponsor, Ascott allows ART to tap on their expertise and experience, while generating a higher yield when the property turns operational by participating in the development of the asset. With this investment, ART will remain within the 10% regulatory limit on property development for REITs.”

“The student accommodation asset has a prime location in downtown Columbia, the capital of South Carolina and the fourth fastest growing state in the USA6. The property caters to the over 35,000 students from the flagship campus of the University of South Carolina (USC), the largest university in the state7. USC’s athletics programme competes in the Southeastern Conference, one of the “Power 5” athletics conferences in the National Collegiate Athletic Association. The University’s student population has been increasing steadily even amid COVID-19 as about 96% of its students are domestic and we expect continued strong demand in the long term,” added Ms Beh.

Premium student living steps away from campus

The freehold purpose-built student accommodation asset will offer 678 beds across 247 units and is close to a plethora of food and entertainment options. It will provide fully furnished studios as well as one- to five-bedroom apartment units. Each unit comes with a fully equipped shared kitchen, as well as appliances such as a washer and dryer. Community amenities include a fitness centre, study lounges, a coffee bar, and jumbotron TV on an elevated amenity deck with swimming pool and cabanas. The property will be managed by an affiliate of one of the members of the third-party partner.

For more information on the student accommodation asset, please see the Annex.

Expanding Ascott Residence Trust’s longer-stay portfolio

In January 2021, ART expanded its investment mandate to include student accommodation to enhance the stability of its portfolio and diversify its portfolio beyond traditional hospitality assets.

In February 2021, ART acquired Paloma West Midtown for US$95 million (S$126.3 million) at an expected EBITDA yield of about 5%. Paloma West Midtown enjoys high occupancy rate of approximately 97%. It is less than a five-minute walk to the Georgia Institute of Technology (Georgia Tech). The 525-bed accommodation serves close to 40,000 undergraduate and graduate students of Georgia Tech. The asset is within walking distance to Georgia Tech’s upcoming Technology Enterprise Park, a 2.2 million square feet research and commercial hub which will drive up economic activities and general rent levels around the district.

ART also recently entered into agreements to acquire three freehold rental housing properties in Sapporo, Japan for a total of JPY 6.78 billion (S$85.2 million8). The average EBITDA yield of the three acquisitions is approximately 4%. On a FY 2020 pro forma basis, ART’s DPS is also expected to increase by 2.6%. The transactions are expected to complete by end June 2021. The three rental housing properties are the 126-unit City Court Kita 1 jo, 158-unit Big Palace Minami 5 jo, and 127-unit Alpha Square Kita 15 jo.

Ascott and Ascott Residence Trust’s presence in the USA

In addition to the two student accommodation assets, Ascott and ART own five other hotels with over 1,200 units in the USA.

Ascott also owns a majority stake in Synergy Global Housing (Synergy), a leading accommodation provider in the market, which offers apartments for corporate lease. Synergy has over 1,800 units in the USA, with a strong presence in the West Coast, including Los Angeles, Orange County, San Diego, Seattle as well as New York.

About The Ascott Limited

Since pioneering Asia Pacific's first international-class serviced residence with the opening of The Ascott Singapore in 1984, Ascott has grown to be a trusted hospitality company with more than 940 properties globally. Headquartered in Singapore, Ascott's presence extends across more than 220 cities in over 40 countries in Asia Pacific, Central Asia, Europe, the Middle East, Africa, and the USA.

Ascott's diversified accommodation offerings span serviced residences, co-living properties, hotels and independent senior living apartments, as well as student accommodation and rental housing. Its award-winning hospitality brands include Ascott, Citadines, lyf, Oakwood, Quest, Somerset, The Crest Collection, The Unlimited Collection, Preference, Fox, Harris, POP!, Vertu and Yello; and it has a brand partnership with Domitys. Through Ascott Star Rewards (ASR), Ascott's loyalty programme, members enjoy exclusive privileges and offers at participating properties.

A wholly owned business unit of CapitaLand Investment Limited, Ascott is a leading vertically-integrated lodging operator. Harnessing its extensive network of third-party owners and in-market expertise, Ascott grows fee-related earnings through its hospitality management and investment management capabilities. Ascott also expands its funds under management by growing its sponsored CapitaLand Ascott Trust and private funds.

For more information on Ascott's industry record of 40 years and its sustainability programme, please visit www.discoverasr.com/the-ascott-limited. Connect with us on Facebook, Instagram, TikTok and LinkedIn.

About CapitaLand Investment Limited

Headquartered and listed in Singapore, CapitaLand Investment Limited (CLI) is a leading global real estate investment manager (REIM) with a strong Asia foothold. As at 30 September 2023, CLI had S$133 billion of real estate assets under management, and S$90 billion of real estate funds under management (FUM) held via six listed real estate investment trusts and business trusts, and more than 30 private vehicles across Asia Pacific, Europe and USA. Its diversified real estate asset classes cover retail, office, lodging, business parks, industrial, logistics and data centres.

CLI aims to scale its FUM and fee-related earnings through fund management, lodging management and its full stack of operating capabilities, and maintain effective capital management. As the investment management arm of CapitaLand Group, CLI has access to the development capabilities of and pipeline investment opportunities from CapitaLand's development arm.

As a responsible company, CLI places sustainability at the core of what it does and has committed to achieve Net Zero carbon emissions for scope 1 and 2 by 2050. CLI contributes to the environmental and social well-being of the communities where it operates, as it delivers long-term economic value to its stakeholders.

Visit http://www.capitalandinvest.com/ for more information.

Joan Tan
Assistant Vice President, Corporate Communications
+65 6713 2864
The Ascott Limited