Ascott Residence Trust Secures Third Student Accommodation Asset With Acquisition In Usa For Us$70 Million — Photo by The Ascott Limited

Ascott Residence Trust (ART) will acquire a freehold 1,005-bed student accommodation asset in Texas, USA for US$70.0 million[1] (S$93.8 million[2]), its third student accommodation investment within a span of seven months. One of the newest student accommodation in the area, Wildwood Lubbock is a cottage-style property which serves over 40,000 undergraduate and graduate students from Texas Tech University (TTU). The accretive acquisition will increase ART’s pro forma FY 2020 Distribution per Stapled Security by approximately 1.5%[3]. The EBITDA[4] yield is expected to be 5.1%. The transaction will be completed on 21 September 2021.

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 third student accommodation asset is in line with ART’s strategy to acquire assets with longer length of stay and diversify our portfolio from traditional hospitality assets, further increasing ART’s resilience and stable income. Leases are typically for a year and Wildwood Lubbock will start contributing income immediately. Despite COVID-19, Wildwood Lubbock is 100% leased for the 2021 Academic Year and there is minimal upcoming private student accommodation supply.”

“With Wildwood Lubbock, ART will expand its longer-stay portfolio to about 11%, keeping us on track to have student accommodation and rental housing properties constitute about 15-20% of our total property value in the medium term. Since the expansion of ART’s investment mandate to include student accommodation assets in January 2021, ART has committed to invest a total of about S$379 million on three prime student accommodation assets in USA and three rental housing properties in Sapporo, Japan at an average EBITDA yield of about 5%[5]. Following this acquisition, ART’s gearing would remain unchanged at 35.9%[6]. ART continues to be in a strong financial position to seek accretive investments in more longer-stay lodging assets and create greater value for our Stapled Securityholders,” added Ms Beh.

Opened in 2017, Wildwood Lubbock is close to TTU, one of the top public research universities[7] with elite college athletics status. TTU’s student population has grown consistently at a compound annual growth rate of 2.5% over the past decade. The overall enrollment for the 2020 Academic Year also increased by 4.0 % year-on-year despite COVID-19. TTU is the sixth largest university in Texas by student population with local students comprising 98% of its total student population. TTU’s athletics programme also competes in the Big 12 Conference, one of the ‘Power 5’ athletics conferences in the National Collegiate Athletic Association.

Wildwood Lubbock has 1,005 beds across 294 units, comprising two- to four-bedroom apartments and each room comes with ensuite bathrooms. The student accommodation has top-of-the-market on-site amenities such as the largest resort-style pool in Lubbock with jetted hot tubs, a swim-up bar, outdoor cabanas with gas grills and firepits. The student accommodation also has a gynamisum, study rooms, a clubhouse with a game-day theatre room, a pet park as well as basketball and volleyball courts. With most students driving to campus, Wildwood Lubbock offers close to 1,100 parking lots. Students can also access the heart of the TTU campus via a shuttle bus ride. Wildwood Lubbock will be managed by an unrelated third-party operator.

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

Growing ART’s stable income with third student accommodation investment

Prior to the acquisition of Wildwood Lubbock, ART acquired the freehold Paloma West Midtown in Atlanta, Georgia, USA in February 2021. The student accommodation was acquired for US$95 million (S$126.3 million) at an EBITDA yield of about 5%. Serving close to 40,000 students of Georgia Institute of Technology, the 525-bed Paloma West Midtown is 100%[8] leased for the 2021 Academic Year.

In June 2021, ART and its sponsor, The Ascott Limited, announced that they will jointly invest and develop a freehold student accommodation in South Carolina, USA. ART will invest US$55.2 million[9] (S$73.4 million) in the 678-bed student accommodation which will serve over 35,000 students from the nearby University of South Carolina. Construction of the student accommodation started in 3Q 2021 and is expected to complete in 2Q 2023. Upon stabilisation, the EBITDA yield is expected to be approximately 6.2%[10].

Annex – About the student accommodation asset

Ascott Residence Trust Secures Third Student Accommodation Asset With Acquisition In Usa For Us$70 Million — Source: The Ascott LimitedAscott Residence Trust Secures Third Student Accommodation Asset With Acquisition In Usa For Us$70 Million — Source: The Ascott Limited
Ascott Residence Trust Secures Third Student Accommodation Asset With Acquisition In Usa For Us$70 Million — Source: The Ascott Limited

[1] The purchase consideration takes into account the agreed property value, which was arrived at on a willing-buyer and willing-seller basis and derived based on the independent valuation dated 7 September 2021 by Colliers International Valuation and Advisory Services LLC at US$72.0 million (equivalent to approximately S$96.5 million)

[2] Based on the exchange rate of US$1 to S$1.34

[3] Based on FY 2020 pro forma Distribution per Stapled Security. The pro forma is based on the audited financial statements of ART for the financial year ended 31 December 2020, assuming that (1) the acquisition was completed on 1 January 2020 and ART held and operated the property through to 31 December 2020 and (2) the acquisition will be funded 40% by debt and 60% by equity

[4] Earnings before net interest expense, tax, depreciation and amortisation

[5] For the student accommodation development in South Carolina, USA, the EBITDA yield is a target yield on a stabilised basis

[6] Based on the unaudited financial statements of ART as at 30 June 2021 and assuming the acquisition was completed on 30 June 2021

[7] TTU has a ‘R1’ designation by the Carnegie Commission on Higher Education, denoting ‘very high’ research activity

[8] As of August 2021

[9] Comprises ART’s investment in the initial 45% stake, estimated cost of the additional 5% stake which ART will acquire at fair market valuation, and other deal related expenses

[10] Based on ART’s total investment

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