Wee Hur shares fall 10.5% after company sells student accommodation portfolio

SINGAPORE - After weeks of speculation, Singapore-listed Wee Hur Holdings confirmed on Dec 16 that it had sold its student accommodation assets in Australia for A$1.6 billion (S$1.37 billion) to real estate services provider Greystar.

Following news of the sale, Wee Hur shares closed on Dec 17 down five cents, or 10.5 per cent, at 42.5 cents. The stock had rallied some 32 per cent over the past two months on talk of a potential sale.

The seven-property student accommodation portfolio, which includes more than 5,500 beds across key Australian cities, had been jointly owned by Wee Hur and Singapore investment fund GIC, with Wee Hur holding a 50.1 per cent stake, and GIC with the remaining 49.9 per cent held through its unit RECO (Weather).

For its stake, Wee Hur will rake in net proceeds amounting to $320 million in cash. The company, through a subsidiary, will also hold a 13 per cent stake in the new entity set up with Greystar.

Wee Hur plans to use the funds from the sale to fuel its growth by supporting reinvestments in its core construction engineering businesses and expansion into new areas like alternative investments.

Mr Goh Wee Ping, chief executive of Wee Hur, said the divestment highlights his group’s ability to execute its vision and deliver superior returns for its investors, regardless of market conditions.

“In 2021 and 2022, amid global uncertainty, we acted decisively to secure liquidity and certainty through our successful recapitalisation with RECO.

“Two years later, as the purpose-built student accommodation market rebounded and our portfolio approached full stabilisation, we capitalised on yet another opportunity to unlock maximum value for our stakeholders through this landmark transaction. We look forward to a new partnership with Greystar and its co-investors.”

Founded in 1980 and listed in 2008, Wee Hur started as a general contractor, and then ventured into property development in 2009.

In 2017, it started a fund of A$350 million to invest in purpose-built student accommodation in Australia, with a target of 5,000 beds. In 2022, it restructured the portfolio, bringing in GIC as its partner.

Due to the extreme shortage of student accommodation in Australia, occupancy at these student accommodation facilities has remained high, and rental renewals have been at higher rates.

Also, given that Wee Hur’s assets are new, it has enjoyed higher upside reversion in rental rates compared with peers.

But here is the thing with the latest deal.

In addition to the $320 million, Wee Hur had cash of about $117 million at mid-year. This works out to 47.55 cents per share in cash alone.

Wee Hur also comes out of this deal holding a 13 per cent stake estimated to be worth about A$200 million with Greystar and clearing all the debt held on the disposed student accommodation portfolio.

But the company’s portfolio now includes three more student accommodation assets at various stages of starting up and a 15,744-bed purpose-built worker dormitory in Singapore.

A new 10,500-bed worker dorm facility will be operational by January 2025. There are also other portfolio projects in the pipeline.