Seven07 ClubRoom (Ascott Residence Trust)

Ascott Residence Trust (ART) is acquiring a freehold 548-bed student accommodation asset, Seven07 in Champaign, Illinois for USD83.25 million.

The asset serves about 56,000 undergraduate and graduate students from the nearby University of Illinois Urbana-Champaign (UIUC).

The acquisition is set to increase ART’s pro forma FY 2020 distribution per stapled security by approximately 1.2%, it said on 1 November.

The entry EBITDA yield is expected to be about 4.5% and is expected to rise to about 4.8% on strong rental growth for academic year (AY) 2022, the trust added.

The transaction, which is expected to be completed in mid-November 2021, will be funded by debt and part of the proceeds from ART’s private placement launched in September 2021.

The acquisition of Seven07 follows ART’s recent acquisition of Wildwood Lubbock in Texas and is ART’s fourth student accommodation investment within 10 months this year.

The student accommodation asset is 100% occupied for AY 2021, with lease terms of about one year.

For the AY 2022, Seven07 is about 50% pre-leased with strong rental growth of about 8% over AY 2021

With Seven07, ART will increase our student accommodation and rental housing properties to about 12% of its total portfolio value.

The trust targets to grow its longer-stay lodging assets to about 15-20% of its portfolio in the medium term.

Following this acquisition, ART’s gearing will be at 35.8%.

ART was last done on the SGX at SGD1.06, which presently implies a distribution yield of 3.86% according to data compiled on the Singapore REITs table.

By Shariffa Al-Habshee

Shariffa joined REITsWeek in 2017, and monitors Asia-Pacific REITs for the publication.