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SPH acquires UK student housing for £133.7 million

Latest deals raise its UK portfolio to over 5,000 beds

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Hampton Square, the student dormitory near Southampton University in Southampton in southern England.

Singapore

SINGAPORE Press Holdings (SPH) has added £133.7 million (S$236.5 million) worth of assets to its United Kingdom student accommodation portfolio, increasing it by 1,243 beds to 5,059 across 20 assets in 10 cities.

The company, which publishes The Business Times, announced in a regulatory filing on Tuesday that its three wholly-owned subsidiaries Straits Five, Straits Six and Straits Eight had entered into a sale-and-purchase agreement with Habitus Holdings, Privilege Holdings, Privilege Southampton Holdings and AIGGRE Europe Real Estate Fund I GP to acquire a set of purpose-built student accommodation (PBSA) assets in the UK.

These assets are in Southampton, Sheffield and Leeds, where there are sizeable full-time student populations, and have strong occupancy rates of over 90 per cent.

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Further, the purchase provides a rental guarantee that covers the 2018/2019 and 2019/2020 academic years, offering earnings visibility as SPH integrates the assets into its portfolio of PBSA managed assets.

This acquisition was completed on Tuesday.

Including its recent acquisition of 380 beds in Lincoln and Glasgow, SPH's PBSA portfolio now has more than 5,000 beds across 10 cities.

The company said: "The AUM (assets under management) is now in excess of S$600 million, establishing SPH as a leading PBSA player in the UK.

"With an enlarged platform, SPH can extract greater economies of scale and has started operationalising its asset management capabilities under the new Capitol Students brand."

SPH has a dedicated team of five in the UK and eight in Singapore overseeing the portfolio, together with more than 100 employees managing these assets.

Sales and marketing capabilities have also been expanded, with a centralised marketing and sales office.

A community portal is being developed for the 2019/2020 academic year, supported with backend business processes and booking systems. The portal aims to define the students' experience and be the connection through which Capitol Students partners the institutions and parents on the students' life-shaping campus journey.

For illustrative purposes, the latest acquisition would have boosted SPH's earnings per share for fiscal year ended Aug 31, 2018 to S$0.179 from S$0.174, had it been effected at the start of the 2018 fiscal year.

There would have been no impact on net tangible assets per share.

SPH chief executive officer Ng Yat Chung said: "Since our first PBSA investment in September 2018, we have successfully completed four acquisitions in the UK.

"These acquisitions are high-quality, cash-yielding assets in key student cities in the UK and will enhance our recurring income going forward. We remain disciplined in our acquisition pipeline, to build our UK PBSA portfolio to a platform of scale."

SPH shares closed a cent higher at S$2.45 before the acquisition was announced.