Investors are positive on Wee Hur Holdings’ latest development as shares in the company surged 11.11% to an intra-day and 52-week high of 22 cents from its last-closed price of 19.8 cents.
Earlier in the day, Wee Hur Holdings announced that it has disposed of its 49.9% stake in its Australia purpose built student accommodation (PBSA) portfolio for A$567.9 million ($573.6 million), which values the entire portfolio at A$1.14 billion.
The stake will be acquired by a purchaser that’s backed by a global institutional investor.
On April 21, Wee Hur Capital, the company’s wholly-owned subsidiary, along with the rest of the unitholders in the Wee Hur PBSA Master Trust (WHPMT), entered into a unit sale agreement with Reco Weather Private Limited.
The 49.9% stake comprises 9.9% from Wee Hur’s original 60% stake while the remaining 40% is held by the other unitholders in the master trust.
The 9.9% of the units comprise 1.24 million units, while the 40% held by the other unitholders comprise 4.99 million units.
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Following the transaction, Wee Hur and Reco Weather will hold a respective 50.1% and 49.9% stake in the master trust.
The master trust was established by Wee Hur in December 2016 to undertake PBSA in Australia by developing a portfolio of up to 5,000 beds in the country’s major cities.
A total of A$350 million was raised for the master trust by Wee Hur Capital, which was also the manager of the trust.
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The portfolio currently comprises 5,662 beds across seven PBSA assets over Sydney, Melbourne, Brisbane, Adelaide and Canberra. Four of the assets are operational while the remaining three will be completed before the end of 2023
As such, the transaction is to be completed over 3 stages of settlement depending on when the properties are being completed. Wee Hur also has a second PBSA fund that owns a single piece of land in Sydney that is to be redeveloped into a 410 bed PBSA asset in a few years’ time.
According to the statement released by Wee Hur, the transaction cements the company’s track record in the PBSA sector in Australia. The company had been building up the portfolio since 2015 by buying up greenfield land and taking on development risk, it says.
On the divestment, Goh Wee Ping, CEO of Wee Hur Capital says, “We believe that given our deep expertise and knowledge in the built environment, this was the best approach to take in executing our investment thesis of addressing the student housing undersupply situation at that time, and our efforts are now starting to pay off.”
Goh Yeow Lian, executive chairman of Wee Hur adds, “We are extremely pleased to have done a recapitalisation of our first Australia focused PBSA fund, providing exit certainty for our investors within the fund term and providing a war chest for the group from the partial recycling of capital should further investment opportunities arise. We are also pleased to welcome our new partner and look forward to further partnerships in the future.”
Goh also thanked Wee Hur’s stakeholders, especially the “investors of our fund who have had to patiently ride out the tough times with us over the past two years.” A special mention is also made to the company’s investment managers in Australia, Intergen Property Group, who “played an irreplaceably significant role in helping us build up the portfolio from scratch since the inception of the fund”.
Further to its statement, Wee Hur has also announced the launch of its own PBSA hospitality brand, Y Suites, for its PBSA portfolio in 2020. The first two properties being operated under Y Suites are Y Suites on Waymouth and Y Suites on A'Beckett, in which both have since commenced operation in January 2022.
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On Wee Hur’s expansion plans for its Australia PBSA portfolio, Goh Wee Ping says, “To be clear, it will still take us some time to stabilise our existing portfolio to generate a healthy annual cashflow to ourselves and our partner, and we will keep working on that.”
He adds that the company is “constantly on the lookout” with Intergen for further opportunities as its “belief in Australia’s export education sector has not changed since we started investing seven years ago”.
“Australia definitely remains a strong tertiary education destination that will continue to attract tertiary students, international and domestic alike. The difference is that now, more than ever, we need to be very selective in where we want to be, focusing on sites that are in great locations that are still underserved by the market, as the market has definitely seen a marked increase in PBSA supply over the past decade,” he continues.
“Overall, though, we think that serious investment activity in the sector is just getting started and there’s still a long way to go before hitting maturity levels like in UK or USA. Going forward, with the recovery of the sector on the horizon as well as Wee Hur’s track record, we are ready to partner with investors who have a keen interest in this sector.”
As at 2.25pm, shares in Wee Hur are trading 2.2 cents higher or 11.11% up at 22 cents.
