Ascott Residence Trust Buys More Student Accommodation in USA

Ascott Residence Trust (ART) is to acquire a freehold 1,005-bed student accommodation asset in Texas, USA for US$70.0 million (S$93.8 million), 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%. The EBITDA yield is expected to be 5.1%.

The transaction is scheduled for completion on 21 September 2021.

Ms Beh Siew Kim, CEO of ART and Ascott Business Trust 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 COVID19, Wildwood Lubbock is 100% leased for the 2021 Academic Year and there is minimal upcoming private student accommodation supply.”

Opened in 2017, Wildwood Lubbock is close to TTU, one of the top public research universities 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% year-on-year despite COVID19.

TTU is the sixth largest university in Texas by student population with local students comprising 98% of its total student population. Its athletics programme also competes in the Big 12 Conference, one of the ‘Power 5’ athletics conferences in the National Collegiate Athletic Association.

“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%. Following this acquisition, ART’s gearing would remain unchanged at 35.9%. 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,” Ms Beh added.

Wildwood Lubbock has 1,005 beds across 294 units, comprising two to four-bedroom apartments and each room comes with an ensuite bathroom.

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. There is also a gym, 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.

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