SPH Buys Student Digs for £448M as Singapore Zeroes in on UK Universities

Singapore Press Holdings has acquired a portfolio of student housing properties in the UK for £448 million ($583 million), as student digs in the Brexit-encumbered country continue to draw Singapore investors.

The SGX-listed media conglomerate’s latest acquisition more than doubles its university accommodation holdings to S$1.5 billion ($1.1 billion), according to a disclosure to the stock exchange.

Adding a further 2,383 beds in the catchment area of top tier institutions, the purchase brings the group’s total holdings of student beds to 7,726 across 18 cities in the UK and Germany.

Ng Yat Chung, SPH’s chief executive officer, said that the purchase continues the group’s expansion in the sector and is in line with its strategy of growing recurring income to deliver sustainable returns to shareholders.

Snapping Up Oxbridge Beds

With 84 percent of the beds across the portfolio near some of the UK’s elite universities, including Oxford, Cambridge and other top-ranked schools, the portfolio will increase SPH’s presence in cities where the supply of student housing is limited, according to the bourse filing.

The portfolio of freehold properties, which consists of five stabilised assets and two development projects, gives SPH a presence in seven new UK cities.

The five properties currently in operation are in Cambridge, Bath, Durham, Edinburgh and York with an average age of just over two and a half years.

Having operated at 100 percent occupancy since 2016, prices for en-suite studios in the properties range from £190 to £320 per week, depending on location.

The completed assets feature 100 Mbps broadband and WiFi, fully fitted shared kitchens and common rooms, as well as study pods and fitness rooms. An app links students up to each building’s management, allowing the students to make payments online and lodge maintenance issues.

The pair of development assets in the portfolio, which are located in Oxford and Brighton, are due to be operational next year and have an estimated construction cost of £37 million.

SPH noted in its filing that the two properties currently under construction carry a fixed monthly coupon payment to be paid by the vendor during the development stage, followed by rental guarantee and income support arrangements – guaranteed by SPH and the seller respectively – during the first three years of operation, which will provide income stability during the development and stabilisation phases.

Taking Control of a Premium Student Brand

The acquisition gives SPH control of UK-based student accommodation platform Student Castle, which owns the properties and will continue to manage the assets following the sale.

The nine-year-old company, which has established a reputation for providing quality student accommodation, was established in 2010 with the backing of British telecoms billionaire Sir Charles Dunstone.

“The acquisition of the Student Castle platform and assets allows us to add a premium brand and portfolio that complements our existing PBSA portfolio,” said Ng Yat Chung, Chief Executive Officer of SPH.

SPH noted in its filing that the fundamentals of the student accommodation sector in the UK remain well supported with the sector receiving a boost from the growing number of international students pursuing higher education in the country.

Ramping Up UK Portfolio

Encouraged by what the group sees as defensive cash-yielding assets, SPH has ramped up its student housing portfolio over the past 15 months.

Seven months ago, the group invested £134 million to add 1,243 beds to its student housing portfolio across three properties in Great Britain. The acquisition of that trio of assets – one each in Southampton, Sheffield and Leeds – came eight months after the state-backed player in September last year had bought a portfolio of 14 university halls in the UK from Unite Students for S$321 million.

Singapore Investors Crowd In to the Market

SPH’s taste for UK student housing opportunities is one that’s becoming as favoured as Hainan chicken rice among the company’s compatriots, as the city-state’s institutions bet on the prospects of the asset class.

Just over a month ago, Far East Orchard agreed to buy a pair of student dorms in the UK from a BlackRock-linked entity for £66.5 million, adding two freehold properties in Leeds and Sheffield with a combined 974 beds to its portfolio of 3,260 beds across 11 dorms in six cities.

A month before that acquisition, Mapletree Investments acquired a pair of purpose built student housing properties in Coventry, England, with the Temasek-backed company paying student housing developer Unite Students £96 million for the assets, bringing Mapletree’s UK portfolio in the asset class to 30 properties across 15 cities.