SPH might buy more UK properties: analyst

They had just purchased 14 purpose-built student accommodations across six towns.

Singapore Press Holdings (SPH) may go for further acquisitions to build greater scale in the UK, CGS-CIMB analyst Ngoh Yi Sin said.

The firm had just purchased a portfolio of purpose-built student accommodation (PBSA) from UK’s largest PBSA manager and developer, Unite Group for $321m (£180m).

“Assuming 60% debt financing (onshore) at 4% interest cost, this translates to c.9.6% cash on cash returns, in line with management’s initial target,” Ngoh said.

About 32% of the portfolio are found in Plymouth.

In relation, the analyst cited that a 2017 JLL report said that Plymouth faces chronic undersupply with only 20- 30% of PBSA relative to its student number.

“We expect a weaker Sterling and Article 4 enforcement (council restriction on change of use from homes to houses in multiple occupation) to underpin demand for UK overseas study and PBSA, respectively” the analyst said.

The 14 Purpose-Built Student Accommodation (PBSA) buildings are located across six towns and cities in established university towns including London, Birmingham, Bristol, Huddersfield, Plymouth, and Sheffield. With a total capacity of 3,436 beds for student accommodation, the properties include 10 freehold assets and 4 leasehold assets.