CapitaLand Ascott Trust Buys Out South Carolina Student Housing Project

Singapore-listed CapitaLand Ascott Trust has taken full ownership of Standard at Columbia after acquiring the remaining 10 percent stake in the US student accommodation asset.

In 2021, CLAS (then known as Ascott Residence Trust) teamed with sponsor The Ascott Ltd to acquire the 678-bed project serving the University of South Carolina for $109.9 million. The partners had jointly invested to own 90 percent of the asset on a 50:50 basis and to develop the property. CLAS subsequently bought Ascott’s 45 percent stake in November 2022.

No purchase price was disclosed for the final 10 percent stake, which was held by a third-party US partner, but Standard at Columbia was valued at S$158 million ($116 million) at the end of 2023, according to the stapled trust’s managers. Serena Teo, CEO of the managers, said Tuesday in a release that the acquisition was in line with the REIT’s strategy to marry stability and growth to generate long-term returns.

“Recycling capital from our divestment proceeds into this longer-stay asset with strong operating performance will further boost our returns,” Teo said.

Yield, Rent on Track

Standard at Columbia began operating last August with an occupancy rate of more than 90 percent. As of May, the pre-leasing occupancy rate had reached 99 percent for the upcoming academic year at the University of South Carolina, the Southern state’s largest higher-education institution at over 35,000 students.

The asset’s earnings before interest, tax, depreciation and amortisation yield on total development cost is estimated at 7 percent. The figure eclipses the 6.2 percent EBITDA yield projected in 2021, given that the property has achieved stable performance, according to the CLAS managers, which are owned by Temasek-controlled CapitaLand Investment. Rent is up 4 percent versus the 2023-24 academic year.

The acquisition was funded by proceeds from the trust’s divestments, which in the past year totalled S$408.1 million from disposals of 10 mature assets, including three in Japan and one each in Singapore and Australia.

In January, CLAS sold Citadines Mount Sophia, a 154-unit serviced apartment block near Singapore’s Bugis area, to a joint venture of BlackRock and Weave Living for S$148 million. In March, the trust sold a trio of Osaka hotels to Axe Management Partners — a property investment firm backed by some of Hong Kong’s wealthiest families — for JPY 10.7 billion and disposed of Courtyard by Marriott Sydney-North Ryde as part of a A$109 million ($71 million) deal that will also include the divestment of Novotel Sydney Parramatta.

Meanwhile, CLAS quietly announced its purchase of Teriha Ocean Stage, a 258-unit turnkey project in Fukuoka’s Island City residential area, in a one-sentence statement tucked into the trust’s 2023 results released in January.

“We will continue to seek accretive investments in properties in prime locations within key capital cities with strong demand drivers and selectively undertake development projects with higher yields,” Teo said Tuesday.

Beating Higher Rates

CLAS achieved a 15 percent year-on-year increase in gross profit during the first quarter of this year on sustained lodging demand and expansion of the portfolio.

All of the $6.3 billion trust’s key markets — Australia, Japan, Singapore, Britain and the US — saw higher revenue per available unit on a yearly basis, the managers said.

CLAS in January posted a 25 percent rise in 2023 distribution to S$237 million. The REIT reported a fair-value gain on the year of S$156 million, marking a 2 percent increase in portfolio valuation, as a stronger operating performance and outlook for its portfolio overcame higher capitalisation rates and discount rates.