Ascott buys US student accommodation property via $204.8m joint venture

Ascott's 779-bed Class A freehold student accommodation development asset in Nebraska, US, will serve over 25,000 undergraduate and graduate students from the nearby University of Nebraska-Lincoln. PHOTO: CAPITALAND INVESTMENT

SINGAPORE (THE BUSINESS TIMES) - CapitaLand Investment's (CLI) wholly owned lodging business unit, The Ascott, is acquiring a freehold student accommodation asset in Nebraska in the United States. It will be through a joint venture, with total US$150 million (S$204.8 million) in committed equity, between Ascott and Riyad Capital.

The new joint venture is named the Student Accommodation Development Venture (Save), and it will develop student accommodation assets in the US, said CLI in a bourse filing on Thursday (Feb 3).

Ascott will manage the joint venture and hold a 20 per cent stake in it, while the remaining stake will be held by Riyad Capital, one of the largest institutional capital partners in the Middle East. Riyad Capital is also an existing partner from Ascott's network of lodging property owners.

When fully deployed, the venture will boost Ascott's funds under management (FUM) by US$375 million.

The purchase of the freehold student accommodation property in Lincoln, Nebraska, is Save's first investment. Currently under construction, the 779-bed Class A asset will serve more than 25,000 undergraduate and graduate students from the nearby University of Nebraska-Lincoln and is slated for completion by August 2023.

With this newest acquisition, Ascott has invested about US$648.9 million to build a "diversified and quality" portfolio of nine student accommodation assets in a year via its funds and its sponsored trust, Ascott Residence Trust, said CLI.

Seven of the nine student accommodation assets are operational. The student accommodation assets are located predominantly in the US's Sun Belt states, Ivy League and "Power 5" athletics conference markets, and situated near their respective key educational institutions.

With more than 5,100 beds, the assets will serve over 295,000 students, added CLI.

CLI's chief executive for lodging Kevin Goh said: "Student accommodation assets, with their counter-cyclical qualities, provide income resilience to our investors. Our well-located assets have performed well, with operating assets enjoying a strong average occupancy rate of close to 100 per cent."

He added: "We remain confident in the segment and look to invest through platforms such as Save to create value for our capital partners by leveraging Ascott's expertise and network to identify under-supplied student accommodation markets that are close to good universities."

Shares of CLI closed at $3.45, down five cents, or 1.4 per cent, on Monday.

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