Singapore-listed Ascott Residence Trust has returned to the US for a second helping of Southern hospitality, joining forces with sister firm The Ascott Ltd to invest in and develop a Columbia, South Carolina student housing project for an expected $109.9 million.
The planned 678-bed accommodation near the University of South Carolina is ART’s second student housing investment in the US. In February, the REIT managed by subsidiaries of property giant CapitaLand acquired a 525-bed property near the Georgia Institute of Technology in Atlanta for $95 million.
ART and Ascott, a wholly-owned lodging unit of CapitaLand, will each hold a 45 percent stake in the initial stage of the latest venture, the partners said in a Wednesday press release. The remaining 10 percent will be held by a third-party partner, identified as a JV between one of the largest student housing developers in the US and a large American real estate developer and contractor.
When the property’s performance stabilises, Ascott and ART will acquire the remaining interest from the third-party partner, they said.
Backing for ART
Kevin Goh, CapitaLand’s chief executive for lodging and Ascott’s chief executive, said the transaction shows Ascott’s ability to seek out and seize investment opportunities in support of ART.
“Through our partnership with the leading local student housing developer, Ascott will gain immediate access to prime student accommodation assets in the USA,” Goh said. “It allows us to combine our own global expertise in lodging and our partner’s expertise on the ground.”
Construction of the new building is scheduled to start in the third quarter of 2021 and conclude in the second quarter of 2023. Situated in downtown Columbia, the state capital, the site is 0.8 kilometres (0.5 miles) from the University of South Carolina campus, attended by more than 35,000 students.
With a net rentable area of 232,748 square feet (21,623 square metres), the yet-to-be-named development will offer fully-furnished studio and 1- to five- bedroom units, 247 in total. Amenities will include a fitness centre, a coffee bar, study lounges and a swimming pool.
“The acquisition of our second student accommodation asset is in line with ART’s strategy to grow our longer-stay portfolio to further enhance income stability and create greater value for our stapled securityholders,” said Beh Siew Kim, chief executive of the trust’s managers. “Student accommodation (has) leases that typically last for a year and its countercyclical nature further strengthens the resilience of ART’s portfolio against any short-term volatility.”
Georgia on Their Mind
ART’s $95 million student accommodation in Atlanta, called Paloma West Midtown, has an occupancy rate of about 97 percent. The 525-bed property sits less than a five-minute walk from Georgia Tech, where close to 40,000 undergraduates and postgraduates study.
The trust acquired the asset, formerly known as Signature West Midtown, from a joint venture of student housing owner-operator Preiss and global asset manager Investcorp. The two partners had purchased the property in February 2020 from Atlanta’s Cartel Properties, which had completed the project in 2019.
The largest hospitality trust in Asia Pacific, ART had an asset value of S$7.2 billion ($5.4 million) as of 31 December 2020. The REIT’s portfolio comprises 86 properties with more than 16,000 units in 38 cities across 15 countries in APAC, Europe and the US, where three New York hotels round out the trust’s holdings.
ART’s managers have announced their intention to boost their presence in the longer-stay accommodation segment and lessen exposure to hospitality assets, which are facing headwinds from the COVID-19 pandemic.
In its most recent transactions in Asia, ART completed the divestment of the Somerset Xu Hui Shanghai serviced apartment building for RMB 1.05 billion ($160 million) and announced the acquisition of three higher-yielding residential properties in Sapporo, Japan for JPY 6.78 billion ($62 million).