The deal involves an initial cash consideration of approximately £411 million for the portfolio, and estimated construction costs of £37 million to complete the development assets in Brighton and Oxford, which are slated to be operational for the academic year 2020/21.
Following the completion of the development assets in Brighton and Oxford, the portfolio is expected to have a total capacity of 2,383 beds for student accommodation.
In total, the transaction will more than double SPH’s assets under management to $1.5 billion.
SPH notes that the properties are situated in established university towns and cities with large full-time student populations. The group added that some 84% of the beds are in close proximity to top-ranked universities such as University of Oxford and University of Cambridge.
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SPH, through its wholly-owned subsidiary, Straits Ten, has simultaneously entered into a sale and purchase agreement with ten vendors to acquire all the shares in Student Castle Investments Holdco Limited, which owns and manages the PBSA portfolio.
Under the terms of the agreement, the purchase consideration includes a £260.7 million payment to the vendors for their shares in Student Castle, a £131.9 million payment to HSBC UK Bank to fully discharge amounts owed by Student Castle under its existing loans, as well as a rental guarantee, income support and construction costs.
According to the group, the consideration payable to the vendors will be fully satisfied in cash and funded through its internal as well as external resources.
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According to a recent valuation report by Cushman and Wakefield, the aggregate market value of the assets stood at £448,000,000 as at end-October.
SPH says that the acquisition dovetails with the group’s ongoing strategy of expanding its asset management business to acquire cash-yielding assets in multiple defensive sectors.
The group adds that the acquisition, which includes the assets’ operating platform, proprietary booking system and management team, will boost its operational capabilities and synergies across its PBSA business.
As at 10.42am, shares in Singapore Press Holdings are trading one cent higher, or 0.5% up, at $2.17.
