Ascott Residence Trust buys US student accommodation for $93.8m

ART has committed to invest in a total of three prime student accommodation assets in the USA and three rental housing properties in Sapporo, Japan.

Ascott Residence Trust (ART) will acquire Wildwood Lubbock, a 1,005-bed student accommodation asset in Texas, USA, for $93.8m (US$70m), its third student accommodation investment within seven months.

The newest acquisition is one of the student accommodations in the area and is a cottage-style property that serves over 40,000 undergraduate and graduate students from Texas Tech University.

According to ART CEO Beh Siew Kim, "The acquisition of our third student accommodation asset is in line with ART's strategy to acquire assets with longer length of stay, as well as 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."

The new asset will increase ART’s pro forma financial year 2020 distribution per stapled security by approximately 1.5%. The earnings before interest, taxes, depreciation, and amortization yield is expected to be 5.1%. The transaction will be completed on 21 September 2021.