CapitaLand Completes Acquisition of Standard at Columbia Student Accommodation in USA
(05/06/24) CapitaLand Ascott Trust (CLAS) has acquired the
remaining 10% stake in Standard at Columbia, a freehold student
accommodation property in South Carolina, USA.
The earnings before interest, taxes, depreciation and amortisation (EBITDA) yield on total development cost is expected
to be approximately 7%, higher than the 6.2% EBITDA yield that was
projected in 2021 on the basis that the property has achieved
stable performance.
The acquisition was funded by proceeds from
CLAS’ earlier divestments.
CLAS acquired Standard at Columbia in phases over
a three-year period. In June 2021, CLAS and its sponsor, Ascott, jointly invested to own 90% of the student
accommodation property on a 50:50 basis and to develop the
property. CLAS subsequently acquired Ascott’s 45% stake in
November 2022.
The 678-bed Standard at Columbia serves over
35,000 undergraduate and graduate students from the nearby
University of South Carolina (USC), the largest university in the
state. It became operational in August 2023 with an occupancy rate
of over 90%.
Standard at Columbia student accommodation in South Carolina, USA
Standard at Columbia is one of the best performing
student accommodation properties serving the USC, commanding one
of the highest rents per bed.
For the upcoming academic year (AY)
2024-2025, the pre-leasing occupancy rate has reached 99% as at
end May, with rental growth of about 4% compared to AY 2023-2024.
“The acquisition of Standard at Columbia is in line with CLAS’
strategy to marry stability and growth to generate long-term
returns to Stapled Securityholders,” said Serena Teo, Chief
Executive Officer of CapitaLand Ascott Trust Management Limited
and CapitaLand Ascott Business Trust Management Pte. Ltd. (the
Managers of CLAS). “Recycling capital from our
divestment proceeds into this longer-stay asset with strong
operating performance will further boost our returns. With an
average length of stay of about one year, student accommodation
properties enhance CLAS’ 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.”
CLAS expanded into the student accommodation
segment in January 2021. Today, CLAS has nine operating student
accommodation properties, with eight properties in the USA and one
in Japan totalling more than 4,500 beds.
As of Q1 2024, CLAS’ eight operating student
accommodation properties in the USA achieved year-on-year
rental growth of about 5.5% (excluding Standard at Columbia which
began receiving students in August 2023) for the current academic year.
Excluding Wildwood Lubbock in Texas, which is undergoing light
refurbishment to refresh the property, rental growth is about
6.5% (excluding Standard at Columbia) y-o-y and the average occupancy rate is about 95%.
For the
AY 2024-2025, pre-leasing of the student accommodation properties
continues to be favourable, with several properties pacing ahead
of their respective markets.
After the acquisition, about 17% of
CLAS’ total portfolio value is in longer-stay assets such as
student accommodation and rental housing properties.
CLAS’
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.