The Ascott Limited, CapitaLand Investment Limited’s wholly-owned lodging business unit, has established a development venture with Riyad Capital to develop student accommodation assets in the US.
The venture will have a total of US$150 million ($204.8 million) in committed equity.
Riyad Capital is one of the largest institutional capital partners in the Middle East and an existing partner from Ascott’s network of lodging property owners.
Ascott will manage the joint venture (JV) named Student Accommodation Development Venture (SAVE) and will hold a 20% stake in the JV.
The remaining 80% will be held by Riyad Capital.
When fully deployed, the venture will boost Ascott’s funds under management (FUM) by US$375 million.
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SAVE’s first investment is a Class A freehold student accommodation development asset in Lincoln, Nebraska, in the US. The asset will serve over 25,000 undergraduate and graduate students from the nearby University of Nebraska-Lincoln. The asset will have a total of 779 beds across 321 fully-furnished units comprising studios, as well as one- to five-bedroom apartments.
The asset is scheduled to be completed by August 2023, in time for the academic year of 2023/2024.
With the new 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 (ART).
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“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%. 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,” says Kevin Goh, CLI’s CEO for lodging.
“SAVE, together with Ascott Serviced Residence Global Fund and ART, are key investment platforms for us to further grow our FUM for lodging. In 2021, our lodging FUM grew by more than 7% year-on-year to over S$8 billion. SAVE will further increase our FUM by about US$375 million when fully deployed and boost our fee-related earnings (FRE),” he adds.
Shares in CLI closed at $3.45 on Jan 28.
Photo: CapitaLand
