Ascott establishes new student accommodation development venture with Riyad Capital

SINGAPORE (EDGEPROP) - CapitaLand Investment’s wholly owned lodging business unit, The Ascott, has established a development venture with Riyad Capital, the investment arm of Saudi Arabia’s Riyad Bank, to develop student accommodation assets in the US.

Ascott and Riyad Capital have collectively put up US$150 million ($204.8 million) in committed equity for Student Accommodation Development Venture (SAVE), which will be managed by Ascott. Ascott will hold a 20% stake in SAVE, with the remaining stake held by Riyad Capital.

According to a press release by Ascott on Feb 3, the venture will boost Ascott’s funds under management (FUM) by US$375 million ($512 million) when fully deployed.

The venture’s first investment is a 779-bed Class A freehold student accommodation development asset in Lincoln, Nebraska, US. The asset will serve over 25,000 undergraduate and graduate students from the nearby University of Nebraska-Lincoln.

Currently under construction, the student accommodation asset is slated for completion by August 2023.

With the new acquisition, Ascott says it has invested about US$648.9 million ($875 million) to build a diversified portfolio of nine student accommodation assets in a year via its funds and its sponsored trust, Ascott Residence Trust (ART).

“Our well-located assets have performed well with operating assets enjoying a strong average occupancy rate of close to 100%. We remain confident in the segment and look to invest through platforms such as SAVE to create value for our capital partners by leveraging Ascott’s expertise and network to identify under-supplied student accommodation markets that are close to good universities,” says Kevin Goh, CapitaLand Investment’s CEO for lodging.