CapitaLand Ascott Enhances Portfolio with Complete Acquisition of Standard at Columbia, Achieves 7% EBITDA Yield

Tuesday, June 4, 2024

CapitaLand Ascott Trust (CLAS) has acquired the remaining 10% stake in Standard at Columbia, a freehold student accommodation property in South Carolina, USA. The EBITDA yield on the total development cost is expected to be around 7%, surpassing the initial 6.2% projection in 2021 due to the property’s stable performance. This acquisition is funded by proceeds from CLAS’ earlier divestments.

CLAS acquired Standard at Columbia through a phased approach over three years. In June 2021, CLAS and its sponsor, The Ascott Limited (Ascott), jointly invested to hold a 90% stake in the property on a 50:50 basis and proceeded with its development. In November 2022, CLAS acquired Ascott’s remaining 45% stake.

The 678-bed Standard at Columbia caters to over 35,000 undergraduate and graduate students from the nearby University of South Carolina (USC), the largest university in the state. It began operations in August 2023 with an occupancy rate exceeding 90%. As one of the top-performing student accommodation properties serving USC, it commands some of the highest rents per bed. For the upcoming academic year (AY) 2024-2025, the pre-leasing occupancy rate has reached 99% as of the end of May, with rental growth of about 4% compared to AY 2023-2024.

Ms Serena Teo, Chief Executive Officer of CapitaLand Ascott Trust Management Limited and CapitaLand Ascott Business Trust Management Pte. Ltd. (the Managers of CLAS), said: “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.  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.”

“We actively enhance the quality of CLAS’ portfolio through accretive acquisitions, opportunistic divestments and asset enhancements.  In 1Q 2024, we completed the acquisition of a rental housing property in Japan. We will continue to seek accretive investments in properties in prime locations within key capital cities with strong demand drivers and selectively undertake development projects with higher yields.  In the last year, we announced divestments of S$408.1 million comprising 10 mature assets^[2] at a premium to book value and an average exit yield of about 3.8%^[3].  In addition, we have seven properties^[4] that are undergoing or will undergo asset enhance initiatives (AEI).  When completed, the AEIs will uplift the value and profitability of our portfolio, positioning CLAS for sustained growth,” added Ms Teo.

CLAS’ Student Accommodation Portfolio

1. Expansion into Student Accommodation: CLAS ventured into the student accommodation segment in January 2021. Today, it boasts nine operational student accommodation properties—eight in the USA and one in Japan—totaling over 4,500 beds.
2. Rental Growth and Occupancy: As of Q1 2024, CLAS’ eight student accommodation properties in the USA achieved a year-on-year (y-o-y) rental growth of approximately 5.5% for the current academic year. Excluding Wildwood Lubbock in Texas, which is undergoing light refurbishment, rental growth is about 6.5% y-o-y, with an average occupancy rate of around 95%. Pre-leasing for AY 2024-2025 shows favorable trends, with several properties leading their respective markets.
3. Portfolio Value Allocation: Post-acquisition, around 17% of CLAS’ total portfolio value is in longer-stay assets such as student accommodation and rental housing properties. CLAS aims to achieve a medium-term asset allocation target with 25-30% of its portfolio value in longer-stay assets and the remaining 70-75% in hospitality assets, such as serviced residences or hotels, to balance stable income with growth income.

• Global Sustainable Tourism Council Recognizes Ascott For Sustainable Practices

• Ascott Limited Launches Citadines Canal Amsterdam in Historic Weaver’s Homes

• Loyalty Pays Off: Ascott Star Rewards’s 5th Anniversary Witnesses Astonishing Revenue Leap For Ascott Limited

• Ascott unveils ‘Ascott Unlimited’ campaign to commemorate 40 years in hospitality

• Ascott record FY 2023 S$331M in fees most property openings ever