SPH acquires 7 student lodging assets for $720m

Singapore Press Holdings (SPH) has expanded its purpose-built student accommodation portfolio with the acquisition of seven assets in the United Kingdom for £411 million (S$720 million).

This will add 2,383 beds to SPH’s portfolio, bringing the total number to 7,726 across 18 cities in the UK and Germany, the media group said yesterday.

It also grows SPH’s footprint across seven additional UK cities: Cambridge, Oxford, Bath, Brighton, Durham, Edinburgh and York.

The two assets in Oxford and Brighton are under development and expected to be operational for the 2020/21 academic year.

SPH, which publishes The Straits Times, will spend about £37 million in estimated construction costs for both assets, to be paid progressively till their completion.

About 84 per cent of the beds are close to top-ranked universities, including the University of Oxford and the University of Cambridge.

The transaction increases SPH’s presence in cities where the supply of student housing is limited, the company noted.

The acquisition was completed simultaneously with the signing of the sales and purchase agreement last Friday by SPH’s wholly owned subsidiary Straits Ten and 10 vendors for all shares in Student Castle Investments Holdco, which owns and manages the portfolio.

2,383

Number of beds added to Singapore Press Holdings’ portfolio with the latest acquisition.

7,726

Total number of beds in SPH’s portfolio across 18 cities in the UK and Germany.

The £411 million consideration payable by Straits Ten includes a £260.7 million payment to the vendors for their Student Castle shares, a £131.9 million payment to HSBC UK Bank to fully discharge amounts owed by Student Castle under existing loans, and a rental guarantee and an income support amount.

It also includes £3.2 million in construction costs, equivalent to 10 per cent of the estimated remaining amounts due to the building contractors of the two assets under development.

The operational assets in Cambridge, Bath, Durham, Edinburgh and York have an average age of 2.6 years and have consistently enjoyed close to full occupancy, SPH said.

They have extensive amenities such as gyms, cinemas and complimentary bicycle rental.

The acquisition includes the Student Castle operating platform, comprising its brand, proprietary booking system and its employees.

The platform will boost SPH’s operational capabilities and improve efficiency and synergies, the company noted.

Demand for purpose-built student accommodation is expected to remain strong for the next decade – the UK’s 18-year-old population is tipped to grow by an average rate of 2 per cent annually between 2020 and 2030.

The UK Department of Education is also aiming to boost the number of international students in the country by 30 per cent to 600,000 by 2030, through incentives such as visa extensions for international students seeking post-study work.

SPH chief executive officer Ng Yat Chung said: “The acquisition of the Student Castle platform and assets allows us to add a premium brand and portfolio that complements our existing purpose-built student accommodation portfolio.

“This is in line with our strategy to grow recurring income to deliver sustainable returns to shareholders.”

SPH shares closed unchanged at $2.16 yesterday.

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