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Thu, 3 February 2022

Ascott and Riyad to Develop Student Accommodation Assets in USA

(03 Feb 2022)  Ascott has established a development venture totalling US$150 million (S$204.8 million) in committed equity to develop student accommodation assets in the USA.

Named Student Accommodation Development Venture (SAVE), Ascott will manage the venture and hold a 20% stake in the joint venture while the remaining stake will be held by Riyad Capital, one of the largest institutional capital partners in the Middle East and an existing partner from Ascotts network of lodging property owners.

When fully deployed, the venture will boost Ascotts funds under management (FUM) by US$375 million (S$512 million).

SAVEs first investment is a 779-bed Class A freehold student accommodation development asset in Lincoln, Nebraska, USA. Click to enlarge.
SAVEs first investment is a 779-bed Class A freehold student accommodation development asset in Lincoln, Nebraska, USA

SAVEs first investment is a 779-bed Class A freehold student accommodation development asset in Lincoln, Nebraska, USA, which will serve over 25,000 undergraduate and graduate students from the nearby University of Nebraska-Lincoln (UNL). Currently under construction, the student accommodation asset is slated for completion by August 2023, in time for the Academic Year of 2023/2024.

With the new acquisition, Ascott has invested about US$648.9 million (S$875 million) to build a diversified and quality portfolio of nine student accommodation assets in a year via its funds and its sponsored trust, Ascott Residence Trust (ART).

Seven of the student accommodation assets are operational. The student accommodation assets are located predominantly in the USAs Sunbelt states, Ivy League and Power 5 athletics conference markets, and situated near their respective key educational institutions.

With over 5,100 beds, the student accommodation assets will serve over 295,000 students from reputable universities with large student populations, steady enrolment growth and a strong athletics programme.

Mr Kevin Goh, CLIs Chief Executive Officer for Lodging, said, Student accommodation assets, with their counter-cyclical qualities provide income resilience to our investors. Our well-located assets have performed well with operating assets enjoying a strong average occupancy rate of close to 100%. We remain confident in the segment and look to invest through platforms such as SAVE to create value for our capital partners by leveraging Ascotts expertise and network to identify under-supplied student accommodation markets that are close to good universities.

SAVE, together with Ascott Serviced Residence Global Fund and ART, are key investment platforms for us to further grow our FUM for lodging. In 2021, our lodging FUM grew by more than 7% year-on-year to over S$8 billion. SAVE will further increase our FUM by about US$375 million (S$512 million) when fully deployed and boost our fee-related earnings (FRE). We will continue to pursue more opportunities while remaining steadfast in building a capital-efficient business model.

Freehold Student Accommodation Asset in Nebraska

The newly acquired student accommodation asset will have 779 beds across 321 fully-furnished units, comprising studio, one to five-bedroom apartments.

The asset has a range of facilities including a clubhouse, games room, pool and courtyard, grill area, coffee bar, private study lounge,  yoga room, fitness centre and tanning beds as well as 163 parking lots.

The property will be a green certified building, obtaining at least a silver rating under the National Green Building Standard (NGBS).

The student accommodation asset will serve UNL, the states flagship university. The university is amongst the top 100 public schools in the USA and is well-recognised for its agriculture engineering programme which is amongst the top 15 programmes in the country.

The student accommodation asset is one block away from UNL campus grounds and a nine-minute walk to the heart of the university. It is also a two-minute walk to the vibrant Haymarket District nearby, home to several retail shops, restaurants, cafes, bars and other lifestyle options.

UNLs total enrolment has grown consistently from 2010 to 2020 and is expected to continue to increase. 90% of its student population are from USA.

UNLs athletics programme also competes in the Big Ten Conference, one of the Power 5 athletics conferences in the National Collegiate Athletic Association.

An US$170 million expansion initiative is also underway, focusing on the universitys engineering faculty. This includes the construction of the Kiewitt Hall, the largest academic facility in the UNLs history. Slated for completion in 2023, the facility will serve as an academic hub to attract more top-tier students. Given its proximity to the UNL campus and limited new private student accommodation supply in the vicinity, the student accommodation asset is poised to perform well.

Mr Mak Hoe Kit, Ascotts Managing Director for Lodging Funds and Head of Business Development & Investment Asset Management, said, We are excited to work with our partner in SAVE to deploy into suitable student accommodation opportunities. More than just a hospitality company, as a vertically-integrated owner and operator of lodging properties around the world, Ascott has the distinct capacity to create value by connecting our partners with investment opportunities. Leveraging our extensive local knowledge, we are able to access favourable off market investment deals, and match them with a ready pool of trusted capital partners. We will continue to seek more like-minded partners to set up new capital partnerships for a range of resilient lodging assets.

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