Ascott Residence Trust (ART) has acquired its first student accommodation asset in Atlanta, Georgia in the US for US$95 million ($126.3 million) on Jan 27.
The purpose-built student accommodation (PBSA) asset, Signature West Midtown, is a freehold property with 525 beds across 183 units.
The transaction is expected to be completed by end 1Q2021.
Following this, ART will expand its investment mandate to include student accommodation.
The accretive acquisition will increase the pro forma FY2020 distribution per stapled security (DPS) by some 4.4%.
“ART’s foray into the student accommodation asset class capitalises on the growing education industry. Enrolment at reputable universities continue to expand, supported by the rising middle class and population growth. The student accommodation asset class is also countercyclical in nature as students tend to invest in education during a recession in preparation for economic recovery,” says Beh Siew Kim, CEO of ART’s managers.
SEE: Ascott Residence Trust reports 52% lower DPS of 1.99 cents for 2H20 on lower revenue, gross profit
Beh further highlighted that the property has a high occupancy rate of 95% despite Covid-19, catering to some 40,000 undergraduate and graduate students attending the nearby Georgia Institute of Technology.
“About 80% of Georgia Tech’s students are domestic and enrolment has been increasing at a compound annual growth rate of 6.7% in the past 10 years. We also expect positive, long-term rental growth for Signature West Midtown with Georgia Tech’s plan to develop Technology Enterprise Park, a research and commercial hub nearby which will drive up economic activities and general rent levels around West Midtown,” she adds.
The US is the largest student housing capital market in the world. According to ART, the number of undergraduates is expected to grow by 13% and set new enrolment records from 2020 to 2026. Demand for student accommodation is expected to remain robust in 2021 due to increasing vaccination efforts, as well as the resumption of travel.
Units in ART closed 2 cents lower or 1.9% down at $1.03 on Jan 26.
