Ascott Residence Trust adds student accommodation to its hospitality investment portfolio

Atlanta

Singapore-based Ascott Residence Trust (ART), the largest hospitality trust in Asia Pacific, is adding student accommodation to its global portfolio of serviced residences, hotels and rental housing properties and other hospitality assets in any country in the world.

ART’s first acquisition in the student accommodation asset class is in the United States with the purpose-built Signature West Midtown, a freehold property with 525 beds across 183 units located in the heart of Atlanta, Georgia, for US$95 million. The transaction is expected to be completed by end 1Q 2021.

Bob Tan, Chairman of Ascott Residence Trust Management Limited (ARTML) and Ascott Business Trust Management Pte. Ltd. (the Managers of ART), said: "ART has remained resilient amid COVID-19 mainly due to the long stay guests of our serviced residences and rental housing properties. The expansion of ART’s investment mandate to include student accommodation will further enhance the stability of ART’s portfolio. Student accommodation, with leases that typically last for a year, will build on our stable income streams. It will offer a new platform for growth and also diversify our portfolio beyond traditional hospitality assets, mitigating the near-term headwinds faced in the hospitality sector.” He added “Student accommodation is one of the most resilient real estate asset classes and has maintained high occupancy during the COVID-19 situation in the USA. ART will continue to seek opportunities for quality student accommodation assets in key markets with strong student population growth”.

Beh Siew Kim, Chief Executive Officer of ARTML and Ascott Business Trust Management Pte. Ltd. (the Managers of ART) added: “Signature West Midtown is an attractive asset with a high occupancy rate of 95% despite COVID-19. It serves close to 40,000 undergraduate and graduate students attending the Georgia Institute of Technology (Georgia Tech[2]) and is less than a five-minute walk from the university. About 80% of Georgia Tech’s students are domestic and enrolment has been increasing at a compound annual growth rate of 6.7% in the past 10 years. We also expect positive, long-term rental growth for Signature West Midtown with Georgia Tech’s plan to develop Technology Enterprise Park, a research and commercial hub nearby which will drive up economic activities and general rent levels around West Midtown.”

Student housing has attracted the attention of hospitality investors recently, although the COVID-19 crisis and related travel restrictions have had a different impact on markets, hitting those with a stronger reliance on international students harder. It is however expected to remain an attractive segment for investors.