CapitaLand’s Ascott Group Adds to Rental Empire With Texas, Australia Deals

Singapore-based CapitaLand’s rental housing division made a pair of overseas bets this week, with the managers of SGX-listed Ascott Residence Trust announcing the purchase of a Texas student accommodation asset and Ascott Ltd taking full ownership of Quest, Australia’s biggest serviced apartment provider.

ART will acquire Wildwood Lubbock, a 1,005-bed property in the northwest corner of the second-biggest US state, for $70 million, marking the trust’s third student housing investment in the last seven months.

“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,” said Beh Siew Kim, chief executive of the trust’s managers, which are wholly owned by property giant CapitaLand.

The cottage-style development serving Texas Tech University will boost ART’s pro forma distribution per stapled security by 1.5 percent for fiscal 2020 once the transaction is completed on 21 September, ART said Thursday in a release. The EBITDA yield is an estimated 5.1 percent.

Southern Exposure

The Texas buy follows ART’s two other acquisitions of student beds in America’s southern tier.

ART joined forces with Ascott Ltd, a wholly owned lodging unit of CapitaLand, to invest in and develop a Columbia, South Carolina student housing project for an expected $109.9 million, in a deal announced in June. Four months earlier, the trust had revealed its first foray into the US student housing market with the acquisition of a mid-rise Atlanta property for $95 million.

The newest addition to the portfolio, serving the 40,000-plus students of Texas’s sixth-largest university, provides 470,700 square feet (43,729 square metres) of net rentable area across 294 units in 2-, 3- and 4-bedroom layouts. Amenities include the biggest resort-style pool in the city of Lubbock, a gymnasium, study rooms, a pet park, and basketball and volleyball courts.

Wildwood Lubbock is 100 percent leased for the current academic year, ART said. The trust did not disclose the seller, saying only that the property would be managed by an unrelated third-party operator.

“With Wildwood Lubbock, ART will expand its longer-stay portfolio to about 11 percent, keeping us on track to have student accommodation and rental housing properties constitute about 15-20 percent of our total property value in the medium term,” Beh said.

As of June, ART’s international portfolio comprised 88 properties with more than 16,000 units in 38 cities across 15 countries in Asia Pacific, Europe and the US.

Quest Fulfilled

On the other side of the world, Ascott Ltd secured full ownership of Melbourne-based Quest for an undisclosed price, as first reported by the Australian Financial Review.

Ascott sealed the deal by acquiring the remaining 20 percent stake owned by Paul Constantinou, the founder of the serviced apartment provider, who confirmed his exit in a LinkedIn post.

“After 33 years, this week I officially say goodbye to Quest Apartment Hotels, a Business that I founded in 1988,” Constantinou wrote. “Ascott Limited has finalised the purchase of the remaining equity I had in the business. I wish them nothing but success in the future.”

According to AFR reports, Ascott paid A$28.8 million for its initial 20 percent stake in Quest in 2014 before upping its interest to 80 percent for an additional A$193 million in 2017, valuing the business at A$300 million (now $221.5 million).

Quest offers more than 150 “apartment hotels” in Australia, New Zealand and Fiji as part of Ascott’s stable of brands that includes Citadines, Somerset, Crest and Lyf.