CapitaLand Ascott Trust (CLAS) has acquired the remaining 10% stake in Standard at Columbia, a freehold student accommodation property in South Carolina, US.
The REIT acquired the property in phases over the last three years. CLAS and its sponsor, The Ascott Limited, first jointly invested to own 90% of the property on a 50:50 basis and to develop the property. CLAS then acquired Ascott’s 45% stake in November 2022.
According to CLAS, the ebitda yield on total development cost is expected to be around 7%, higher than the 6.2% yield that was projected in 2021. The projected yield was based on the premise that the property had achieved a stable performance.
The property has 678 beds and serves over 35,000 undergraduates and graduate students from the University of South Carolina (USC), which is located nearby. It turned operational in August 2023 with an occupancy rate of over 90%. The property is also said to be one of the best performing student accommodation properties serving the USC, with one of the highest rents per bed, according to property management software company, RealPage.
For the upcoming academic year (AY) 2024-2025, the pre-leasing occupancy rate reached 99% as at the end of May with rental growth of about 4% compared to the AY2023 – 2024.
“The acquisition of Standard at Columbia is in line with CLAS’s strategy to marry stability and growth to generate long-term returns to stapled securityholders. Recycling capital from our divestment proceeds into this longer-stay asset with strong operating performance will further boost our returns,” says Serena Teo, CEO of the managers.
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“With an average length of stay of about one year, student accommodation properties enhance CLAS’s stable income stream and strengthen our portfolio’s resilience against macroeconomic uncertainties. It diversifies our portfolio which also comprises hospitality assets such as serviced residences or hotels that allow us to capture travel demand for growth income,” she adds.
Following the acquisition, 17% of CLAS’s total portfolio value is in longer-stay assets such as student accommodation and rental housing properties. The REIT’s medium-term asset allocation target is to have a stable income base with 25% - 30% of its total portfolio value in longer-stay assets, and the remaining 70% - 75% in hospitality assets such as serviced residences or hotels for growth income.
Units in CLAS closed at 89.5 cents on June 3.
