Far East Orchard has acquired a 180-bed freehold student accommodation property in the UK for GBP13.9 million ($22.9 million).
The sale and purchase agreement (SPA) was entered into by Far East Orchard’s wholly-owned subsidiary, IUKSeven, and Empiric Limited on Dec 8.
The property, which is also known as Emily Davies, is located at 1 Fitzhugh Street in Southampton, southwest of London. Spanning an area of 1,380 sqm, the property was refurbished in 2021 with a newly added amenity block. The new block includes facilities such as a gym, cinema room, games room, large open study space and a private dining room.
Located within the city centre, the property is within walking distance of three Solent University (SU) campuses, and adjacent to the Southampton Central Railway Station which connects to London within 90 minutes.
According to Far East Orchard, the consideration was paid in cash by IUKSeven through external debt facilities. Based on the valuation report by Jones Lang LaSalle Limited (JLL), the property’s market value as at Nov 25, was around GBP14.2 million.
The acquisition is expected to be completed in April 2023. Following its completion, Far East Orchard will have around 4,400 beds in its student accommodation portfolio in the UK. The group targets to have 5,000 beds by 2025.
“The acquisition is in line with the group’s intent to grow our student accommodation portfolio as we continue to build our lodging portfolio to increase recurring and stabilised income. With the addition of Emily Davies, the near 100% occupancy rate of our overall portfolio for the current academic year 2022/23 underscores the resiliency of the UK student accommodation sector against the current economic backdrop,” says Alan Tang, Far East Orchard’s group CEO.
He adds: “There is a favourable demand and supply imbalance of student accommodation in the UK with the return of international students following the lifting of travel restrictions, coupled with the projected domestic students’ growth over the next 10 years. Notwithstanding inflationary cost pressures amidst increasing energy prices and rising interest rates, we remain upbeat about the student accommodation sector, which acts as an inflationary-hedged asset class. The proximity of Emily Davies to the city centre and both universities in Southampton is also an added advantage for the property to attract students, alongside strong rental growth.”
Shares in Far East Orchard closed at $1.03 on Dec 8.
