Ascott Residence Trust buys US student accommodation asset for $126.3m

Signature West Midtown has a 95% occupancy rate and has 525 beds.

Ascott Residence Trust (ART) has acquired Signature West Midtown, a purpose-built student accommodation asset in Atlanta, Georgia, USA for $126.3m (US$95m), the trust announced in a press release.

Signature West Midtown is a freehold property with 525 beds across 183 units located in the heart of Atlanta. It has a high occupancy rate of 95% and serves close to 40,000 undergraduate and graduate students attending the Georgia Institute of Technology (Georgia Tech).

The transaction marks ART’s expansion into the student accommodation asset class. The transaction is expected to be completed in Q1 and will reportedly increase the pro forma FY2020 distribution per stapled security by approximately 4.4%, ART said.

ART also expects long-term rental growth for Signature West Midtown with Georgia Tech’s plan to develop Technology Enterprise Park, a research and commercial hub nearby, noted Beh Siew Kim, CEO of ARTML and Ascott Business Trust Management.

“Student accommodation, with leases that typically last for a year, will build on our stable income streams. It will offer a new platform for growth and also diversify our portfolio beyond traditional hospitality assets, mitigating the near-term headwinds faced in the hospitality sector,” said Bob Tan, chairman of Ascott Residence Trust Management Limited and Ascott Business Trust Management (the managers of ART).

“Student accommodation is one of the most resilient real estate asset classes and has maintained high occupancy during the COVID-19 situation in the USA,” he added.

Tan also shared that ART will continue to seek opportunities for student accommodation assets in key markets with strong student population growth, and will also look at expanding their rental housing portfolio.