CapitaLand Investment Limited’s (CLI) wholly owned lodging business unit, The Ascott Limited (Ascott) has established a development venture totalling US$150 million (S$204.8 million) in committed equity to develop student accommodation assets in the USA. Named Student Accommodation Development Venture (SAVE), Ascott will manage the venture and hold a 20% stake in the joint venture while the remaining stake will be held by Riyad Capital. Riyad Capital is one of the largest institutional capital partners in the Middle East and an existing partner from Ascott’s network of lodging property owners. When fully deployed, the venture will boost Ascott’s funds under management (FUM) by US$375 million (S$512 million).
SAVE’s first investment is a 779-bed Class A freehold student accommodation development asset in Lincoln, Nebraska, USA. This asset will serve over 25,000 undergraduate and graduate students from the nearby University of Nebraska-Lincoln (UNL). Currently under construction, the student accommodation asset is slated for completion by August 2023, in time for the Academic Year of 2023/2024. With the new acquisition, Ascott has invested about US$648.9 million (S$875 million) to build a diversified and quality portfolio of nine student accommodation assets in a year via its funds and its sponsored trust, Ascott Residence Trust (ART).
Mr Kevin Goh, CLI’s Chief Executive Officer for Lodging said: “Student accommodation assets, with their counter-cyclical qualities provide income resilience to our investors. Our well-located assets have performed well with operating assets enjoying a strong average occupancy rate of close to 100%. We remain confident in the segment and look to invest through platforms such as SAVE to create value for our capital partners by leveraging Ascott’s expertise and network to identify under-supplied student accommodation markets that are close to good universities.”
“SAVE, together with Ascott Serviced Residence Global Fund and ART, are key investment platforms for us to further grow our FUM for lodging. In 2021, our lodging FUM grew by more than 7% year-on-year to over S$8 billion. SAVE will further increase our FUM by about US$375 million (S$512 million) when fully deployed and boost our fee-related earnings (FRE). We will continue to pursue more opportunities while remaining steadfast in building a capital-efficient business model,” added Mr Goh.
Mr Mak Hoe Kit, Ascott’s Managing Director for Lodging Funds and Head of Business Development & Investment Asset Management, said: “We are excited to work with our partner in SAVE to deploy into suitable student accommodation opportunities. More than just a hospitality company, as a vertically-integrated owner and operator of lodging properties around the world, Ascott has the distinct capacity to create value by connecting our partners with investment opportunities. Leveraging our extensive local knowledge, we are able to access favourable off-market investment deals, and match them with a ready pool of trusted capital partners. We will continue to seek more like-minded partners to set up new capital partnerships for a range of resilient lodging assets.”
Well-located freehold student accommodation asset in Nebraska
The newly acquired student accommodation asset will have 779 beds across 321 fully-furnished units, comprising studio, one- to five-bedroom apartments. The asset has a range of facilities including a clubhouse, games room, pool and courtyard, grill area, coffee bar, private study lounge, yoga room, fitness centre and tanning beds as well as 163 parking lots. The asset will be a greencertified building, obtaining at least a silver rating under the National Green Building Standard (NGBS)
The student accommodation asset will serve UNL, the state’s flagship university. The university is amongst the top 100 public schools in the USA and is well-recognised for its agriculture engineering programme which is amongst the top 15 programmes in the country7
. The student accommodation asset is one block away from UNL campus grounds and a nine-minute walk to the
heart of the university. It is also a two-minute walk to the vibrant Haymarket District nearby, home to several retail shops, restaurants, cafes, bars and other lifestyle options.
UNL’s total enrolment has grown consistently from 2010 to 2020 and is expected to continue to increase. 90% of its student population are from USA. UNL’s athletics programme also competes in the Big Ten Conference, one of the ‘Power 5’ athletics conferences in the National Collegiate Athletic Association. A US$170 million expansion initiative is also underway, focusing on the university’s engineering faculty. This includes the construction of the Kiewitt Hall, the largest academic facility in the UNL’s history. Slated for completion in 2023, the facility will serve as an academic hub to attract more top-tier students. Given its proximity to the UNL campus and limited new private student accommodation supply in the vicinity, the student accommodation asset is poised to perform well. For more information on the student accommodation asset, please see Annex B.
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