SINGAPORE: Singapore Press Holdings Limited’s subsidiary, Straits Ten Pte. Ltd., has acquired a portfolio of high quality Purpose-Built Student Accommodation (PBSA) assets in the UK.
With this Student Castle portfolio, Singapore Press Holdings (SPH) expands its footprint across seven new UK cities, namely Cambridge, Oxford, Bath, Brighton, Durham, Edinburgh and York.
The assets in Oxford and Brighton (collectively, the Development Assets) are under development. The deal involves an initial cash consideration of approximately £411 million for the portfolio.
The estimated construction costs to complete the Development Assets, to be paid progressively till completion are approximately £37 million.
The transaction will more than double the assets under management to a sizeable S$1.5 billion and underpin SPH’s position as a leading player in the UK PBSA market. About 84% of the beds are in close proximity to top-ranked and Russell Group universities including the world-renowned University of Oxford and University of Cambridge. The transaction increases SPH’s presence in cities where the supply of student housing is limited.
Within the portfolio, the Development Assets are in the development stage and expected to be operational for the academic year 2020/21. Both assets carry a fixed monthly coupon payment during the development stage, followed by rental guarantee and income support arrangements during the first three years of operation.
This will provide income stability during the development and stabilisation phase of the assets. Excluding the Development Assets, the five operational assets have an average age of 2.6 years. The assets have consistently enjoyed close to full occupancy.
All assets offer extensive amenities such as gyms, study pods, social spaces, cinemas, cafés and complimentary bicycle rental.
Mr. Ng Yat Chung, Chief Executive Officer of SPH, said: “We continue to expand the scale of our PBSA portfolio. The acquisition of the Student Castle platform and assets allows us to add a premium brand and portfolio that complements our existing PBSA portfolio. This is in line with our strategy to grow recurring income to deliver sustainable returns to shareholders.”
The fundamentals of the student accommodation sector in the UK remain well-supported by positive secular trends in the domestic 18-year-old population, positive government policies to grow the number of foreign students, and a record number of international students from outside Europe.
Also included in the acquisition is the Student Castle operating platform, comprising its brand, its proprietary booking system, and its employees. Acquiring the platform will boost SPH’s operational capabilities and improve efficiency and synergies. Together with SPH’s Capitol Students brand, the Group has an enhanced portfolio with offerings that cater to both the mid and high-end markets for local and international students. Completion occurred simultaneously with the signing of the sale and purchase agreement.