CDL Hospitality Trusts Enters Student Accommodation Business with £37.3m Acquisition
Acquisition Overview
CDL Hospitality Trusts (CDLHT) has ventured into the student accommodation business for the first time with the purchase of a purpose-built student accommodation (PBSA) in Liverpool, United Kingdom. The acquisition forms part of CDLHT’s wider purchase of a freehold land, which also includes a piece of vacant land adjacent to the student accommodation asset.
Transaction Details
The PBSA, known as Benson Yard, was opened in February 2023 and will continue to be managed by the existing operator, Fresh Property, after the transaction is completed. The whole site, including the PBSA and adjacent vacant land, was acquired for £37.3 million (S$63.9 million). The total cost of the acquisition, including estimated £3.3 million in transaction costs, is about £40.6 million.
Funding and Impact on Pro Forma Gearing Ratio
The deal will be funded through debt financing, which will increase CDLHT’s pro forma gearing ratio to 40.2 per cent, from 38.8 per cent pre-acquisition.
Vacant Land and Future Development
The vacant freehold land has planning consent for a 144-key hotel to be built. However, CDLHT will need to conduct feasibility studies to determine the best use of the land. Other options, such as building another PBSA block, could complement the existing Benson Yard.
Rationale and Strategic Objectives
This acquisition aligns with CDLHT’s revised principal investment strategy in 2021 to diversify into adjacent living assets. The addition of Benson Yard will contribute to a more diversified and balanced income profile, supporting CDLHT’s strategic objectives for stable long-term growth and income resilience.
Occupancy and Rental Yield
As at Dec 10, Benson Yard has an occupancy of 95 per cent for the academic year running from Sep 1, 2024 to Aug 31, 2025. Based on rents for the leases signed in the academic year, the pro forma net property-income yield is about 5.6 per cent. This does not include any additional leases to be signed, as well as summer income during the rest of this academic year.
Conclusion
CDL Hospitality Trusts’ entry into the student accommodation business marks a significant milestone in its diversification efforts. The acquisition of Benson Yard provides a defensive asset with attractive location and occupancy prospects, supporting CDLHT’s strategic objectives for stable long-term growth and income resilience.
Frequently Asked Questions
Q: What is the total cost of the acquisition?
A: The total cost of the acquisition is about £40.6 million, including an estimated £3.3 million in transaction costs.
Q: How will the deal be funded?
A: The deal will be funded through debt financing.
Q: What is the impact on CDLHT’s pro forma gearing ratio?
A: The deal will increase CDLHT’s pro forma gearing ratio to 40.2 per cent, from 38.8 per cent pre-acquisition.
Q: What is the current occupancy rate of Benson Yard?
A: As at Dec 10, Benson Yard has an occupancy of 95 per cent for the academic year running from Sep 1, 2024 to Aug 31, 2025.
