Ascott Residence Trust (ART) will acquire a freehold 1,005-bed student accommodation asset in Texas, USA for US$70.0 million (S$93.8 million), its third student accommodation investment within a span of seven months. One of the newest student accommodation in the area, Wildwood Lubbock is a cottage-style property which serves over 40,000 undergraduate and graduate students from Texas Tech University (TTU). The accretive acquisition will increase ART’s pro forma FY 2020 Distribution per Stapled Security by approximately 1.5%. The EBITDA yield is expected to be 5.1%. The transaction will be completed on 21 September 2021.
Ms Beh Siew Kim, Chief Executive Officer of Ascott Residence Trust Management Limited and Ascott Business Trust Management Pte. Ltd. (the Managers of ART) said: “The acquisition of our third student accommodation asset is in line with ART’s strategy to acquire assets with longer length of stay and diversify our portfolio from traditional hospitality assets, further increasing ART’s resilience and stable income. Leases are typically for a year and Wildwood Lubbock will start contributing income immediately. Despite COVID-19, Wildwood Lubbock is 100% leased for the 2021 Academic Year and there is minimal upcoming private student accommodation supply.”
“With Wildwood Lubbock, ART will expand its longer-stay portfolio to about 11%, keeping us on track to have student accommodation and rental housing properties constitute about 15-20% of our total property value in the medium term. Since the expansion of ART’s investment mandate to include student accommodation assets in January 2021, ART has committed to invest a total of about S$379 million on three prime student accommodation assets in USA and three rental housing properties in Sapporo, Japan at an average EBITDA yield of about 5%. Following this acquisition, ART’s gearing would remain unchanged at 35.9%. ART continues to be in a strong financial position to seek accretive investments in more longer-stay lodging assets and create greater value for our Stapled Securityholders,” added Ms Beh.
Opened in 2017, Wildwood Lubbock is close to TTU, one of the top public research universities with elite college athletics status. TTU’s student population has grown consistently at a compound annual growth rate of 2.5% over the past decade. The overall enrollment for the 2020 Academic Year also increased by 4.0 % year-on-year despite COVID-19. TTU is the sixth largest university in Texas by student population with local students comprising 98% of its total student population. TTU’s athletics programme also competes in the Big 12 Conference, one of the ‘Power 5’ athletics conferences in the National Collegiate Athletic Association.
Wildwood Lubbock has 1,005 beds across 294 units, comprising two- to four-bedroom apartments and each room comes with ensuite bathrooms. The student accommodation has top-of-the-market on-site amenities such as the largest resort-style pool in Lubbock with jetted hot tubs, a swim-up bar, outdoor cabanas with gas grills and firepits. The student accommodation also has a gynamisum, study rooms, a clubhouse with a game-day theatre room, a pet park as well as basketball and volleyball courts. With most students driving to campus, Wildwood Lubbock offers close to 1,100 parking lots. Students can also access the heart of the TTU campus via a shuttle bus ride. Wildwood Lubbock will be managed by an unrelated third-party operator.