SPH Buys 14 UK Student Housing Assets for $233M

Singapore Press Holdings (SPH), a listed media group that owns the Straits Times and Business Times, is buying a portfolio of 14 student accommodation properties located in six towns and cities across the UK for S$321 million ($233 million) in cash, the company announced on Monday.

The government-backed newspaper publisher is acquiring the properties from Unite Integrated Solutions, a subsidiary of UK-based student accommodation operator Unite Students, through three wholly owned subsidiaries Straits One, Straits Two and Straits Three.

The portfolio includes 14 assets, which are situated in established university towns and cities with large full-time student populations, including London, Birmingham, Bristol, Huddersfield, Plymouth, and Sheffield, as mentioned in the announcement, comprising 10 freehold assets and four leasehold assets.

SPH’s purchase marks the third major acquisition of UK student accommodation by a Singaporean investor in the last two years after SPH’s compatriots at GIC and Mapletree both decided to bet on Europe’s rising student housing market in early 2016.

Buying 3,436 UK Student Beds

Following SPH’s acquisition of the six city portfolio, the assets will be managed by London-based student accommodation operator Victoria Hall Management.

SPH also got some guarantees on its investment in 3,436 student beds. According to the terms of the agreement, the price for the acquisition might be adjusted downwards if the actual rental income is lower than 95 percent of the estimated income of the properties by November 30. Although the company didn’t disclose the estimated rental income, United is guaranteeing a minimum of £2.5 million ($3.28 million) in rental income to cover any gap between actual income and estimated income.

According to SPH, this latest purchase, which will be completed this Thursday, expands the group’s real estate management portfolio in the rising purpose-built student accommodations market in the UK.

Singaporean Investors Want to House More UK Students

With this latest investment, three of Singapore’s largest state-backed corporations have now invested in UK student housing.

Last February, the Singaporean sovereign wealth fund GIC established a joint venture with Unite Students to build a 3,067 bed complex at Aston University in Birmingham. The £227 million joint venture follows GIC’s 2016 purchase of a 7,150-bed portfolio from Oaktree Capital Management for £700 million ($900 million), in partnership with Dubai-based Global Student Accommodation Group.

Also in 2016, another Singaporean investor, Temasek Holdings-backed Mapletree, bought a portfolio of 25 buildings and more than 5,500 beds from Mansion Student Accommodation Fund’s Ardent Portfolio for £417 million.

Nationally, UK student accommodations had an average of one bed for every 2.8 students as of last year, according to the JLL’s 2017 London Student Housing report. With the enrolment rate predicted to increase by 23 percent for higher education, the student housing market shows increasing demanding, presenting new opportunities for overseas investors.