Far East Orchard O10 has announced its acquisition of a 49% stake in Homes For Students (HFS), the UK’s largest independent purpose-built student accommodation (PBSA) operator, for GBP17.6 million ($30.0 million).
After acquiring the initial 49% interest in HFS from two non-management sellers, Far East Orchard will be able to progressively acquire the remaining 51% interest in HFS in two stages, by September 2025 and November 2030, under the terms of the agreement.
The HFS key management team has indicated that they intend to continue to remain in the business throughout this entire duration.
HFS operates over 40,000 beds in more than 50 university towns and cities in the UK and Ireland, providing an integrated student accommodation management and facilities management service.
Far East Orchard says the acquisition will propel its growth strategy, expanding its capabilities and strengthening its position in the UK PBSA sector, by leveraging HFS’s operating platform to enhance its operating management capabilities.
CEO Alan Tang says: “The strategic acquisition into HFS is in alignment with our FEOR 25 strategy to build a lodging platform to deliver growth and build a sustainable and recurring income stream. It will propel us to surpass our target of 5,000 beds, ahead of 2025.”
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“The continued strong fundamentals in the student accommodation sector, fuelled by domestic and international student demand, support our confidence in this sector for the coming years. We are assured that HFS’ dedicated and capable management team will continue to provide exceptional services to their clients and add value to the students’ experience,” Tang adds.
Martin Corbett, founder and CEO of HFS, says: “HFS has a vibrant executive and senior management team and dedicated property teams who have been instrumental in our success to date. We are delighted to partner with Far East Orchard, who understands the UK’s PBSA sector and comes on board to support our plans to expand both PBSA and other related living sectors and markets using the enviable reputation that HFS has built in the UK and Ireland as a foundation.”
Far East Orchard’s PBSA portfolio currently comprises close to 3,700 beds across key cities in the UK. With the completion of the ongoing development in Bristol, and at the Glasgow site recently acquired in March 2024, the Group’s PBSA portfolio will grow to approximately 4,700 beds across 15 properties in the UK.
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Far East Orchard says the UK’s PBSA market remains strong with indications that continued student demand and an imbalance in the demand and supply of university student housing will continue to fuel rental growth.
For its FY2023, the company’s UK PBSA portfolio maintained its near-full occupancy rate of 99% for a second consecutive year, reflecting the strong continued demand for student accommodation. This asset-light acquisition strategy will provide the Group with a stable recurring income from the PBSA business segment, says Far East Orchard.
Shares in Far East Orchard close 1 cent lower or 0.99% down at $1.00 on April 25.
