Ascott Residence Trust has agreed to acquire four more US student accommodation assets for $213 million, bringing the Singapore-listed REIT’s portfolio of North American university housing to eight properties as it continues to expand beyond its roots in serviced apartments and hotels.
The trust’s four latest assets have a total of 1,651 beds and serve five universities across Pennsylvania, North Carolina and Ohio, ART’s manager said Monday in a release. The acquisition follows four separate transactions totalling $303.5 million to add US student housing assets since the start of 2021, with ART seeking dependable income streams as its hospitality-heavy portfolio reels from the COVID-19 pandemic.
The trust sponsored by Ascott Ltd, a rental housing division of property giant CapitaLand, identified the sellers of the latest properties as unrelated third parties. All four projects were recently developed by CA Ventures, a Chicago-based investor and operator of student apartments near large universities.
“With the new acquisition, ART has doubled the number of student accommodation assets in our portfolio,” said Beh Siew Kim, chief executive of the trust’s managers. “Our student accommodation assets and rental housing properties now make up about 16 percent of our total portfolio value, surpassing our initial target of 15 percent.”
The top-valued asset in this buying round is The Link University City, a Philadelphia apartment complex serving two private schools, Drexel University and the Ivy League’s University of Pennsylvania. ART will pay $65.5 million for the 251-bed facility comprising 105,129 square feet (9,767 square metres) of net rentable area in studio to three-bedroom floor plans, as well as 7,466 square feet of commercial space.
Two North Carolina properties, Latitude on Hillsborough and Uncommon Wilmington, respectively serve North Carolina State University and the University of North Carolina Wilmington. The 180-bed Latitude is changing hands for $64 million and features one- to five-bedroom units across 212,210 square feet of NRA, while the 493-bed Uncommon is going for $54 million and offers one-, two- and four-bedroom models across 184,284 square feet, plus 4,965 square feet of commercial space.
The 384-bed Latitude at Kent, serving Kent State University near Cleveland in Ohio, is selling for $29.5 million and leases one- to four-bedroom units across 152,307 square feet of NRA.
The North Carolina properties were completed in 2020 and the others in 2019. Like many newly built student residences, the buildings boast fitness centres, lounges and other amenities. All are freehold properties except for Latitude at Kent, which is on a leasehold expiring at the end of 2117.
CA Ventures, which counts Canadian pension fund manager QuadReal among its backers, develops student accommodation in the US, Latin America and Europe. Since its founding in 2004, the investment manager has delivered more than 70 student housing projects across over 40 university markets.
ART has picked up where it left off in November, when the REIT announced the $83.25 million acquisition of the 548-bed Seven07 near the University of Illinois Urbana-Champaign.
In September, the trust acquired Wildwood Lubbock, a 1,005-bed property in the northwest corner of Texas, for $70 million. That transaction came after ART joined forces with Ascott Ltd to invest in and develop a Columbia, South Carolina student housing project for an expected $109.9 million in a deal announced in June. In January, the trust revealed its first foray into the US student housing market with the purchase of a mid-rise Atlanta property for $95 million.
“ART’s student accommodation assets in the USA have proven to be resilient throughout COVID-19,” Beh said. “We are investing more into the sector given the favourable conditions of the overall student accommodation market in the USA. Occupancy rates have recovered to pre-COVID-19 levels and the 2.3 percent year-on-year increase in rents for academic year 2021 is the strongest rental growth rate across the country since fall 2016.”
ART is the largest hospitality trust in Asia Pacific, with an asset value of S$7.3 billion (now $5.4 billion) at the end of June. As of September, ART’s international portfolio encompassed 89 properties with about 17,000 units in 39 cities across Asia Pacific, Europe and the US, mostly operated under the Ascott The Residence, Somerset, Quest and Citadines brands.