Ascott Residence Trust (ART) will acquire a freehold 1,005-bed student accommodation asset in Texas, USA for USD70.0 million.
The asset, Wildwood Lubbock, will be the trust’s third student accommodation investment within a span of seven months.
It serves over 40,000 undergraduate and graduate students from Texas Tech University (TTU).
“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” said Beh Siew Kim, CEO of the trust’s manager.
“Leases are typically for a year and Wildwood Lubbock will start contributing income immediately”, she said.
“Despite COVID-19, Wildwood Lubbock is 100% leased for the 2021 academic year and there is minimal upcoming private student accommodation supply”.
The asset will be accretive and increase ART’s pro forma FY2020 distribution per stapled security by approximately 1.5%.
The EBITDA yield is expected to be 5.1%. The transaction will be completed on 21 September 2021.
With Wildwood Lubbock, ART will expand its longer-stay portfolio to about 11%.
The trust aims to have student accommodation and rental housing properties constitute about 15-20% of its property value in the medium term.
Following this acquisition, ART’s gearing would remain unchanged at 35.9%.
ART was last done on the Singapore Exchange at SGD1.04, which currently implies a distribution yield of 3.93% according to data compiled on the Singapore REITs table.