Metro Holdings’ wholly-owned subsidiary Sun Capital Assets has, on Dec 21, formed a strategic partnership with Lee Kim Tah Holdings and Aurum Investments (collectively the joint venture partners) to establish a purpose-built student accommodation (PBSA) fund with the intent to expand its portfolio in the UK.
Aurum Investments is a direct wholly-owned subsidiary of Woh Hup Holdings.
The joint venture partners have also incorporated Paideia Partners and Paideia Trustee within the partnership. Sun Capital will own 33.33% while Lee Kim Tah and Aurum will own the remaining 66.67% of each of Paideia Partners and Paideia Trustee.
The fund, called Paideia Capital UK Trust, has an initial aggregate committed capital of £60 million ($108 million) upon its first closing, and will acquire PBSA properties in the UK to grow its asset portfolio size to £150 million.
SEE: Metro reports 81.9% plunge in 2H20 earnings to $11.3 mil on fair value losses
Upon its first closing, the trust has entered into a sale and purchase agreement to acquire its first PBSA seed property known as Red Queen, Warwick for a total consideration of £21.5 million.
The property is located about a mile north of the main campus of the University of Warwick, which is ranked 10thin the UK in the Times Good University Guide 2021.
The campus has about 22,000 full-time students. The property can be easily accessed via private and public transport, and is located near several retailers, leisure facilities, bars, cafes and shops.
The property was completed in September 2020 with 210 en-suite beds over five floors. It has several communal areas including a study area, gym, cinema and lounge.
Red Queen currently has a committed occupancy rate of 90%.
“This investment signifies Metro’s first collaboration with Lee Kim Tah and Woh Hup together, and deepens the Group’s investment in the UK,” says Metro chairman Winston Choo.
“This strategic investment represents an excellent proposition to further diversify our investments through the acquisition of suitable PBSA assets. It will position the Group favourably amidst the rising demand for PBSA in the UK. This will further enhance the quality, diversity and income profile of Metro’s investment portfolio and at the same time to generate stable and recurring income stream to the Group immediately,” Choo adds.
“Together with our experienced partners LKT and WH, we will leverage on this platform to grow the PBSA portfolio across England, Scotland, Wales and Northern Ireland, where we see promising prospects, given the resilience in demand for quality higher education. Going forward, this platform can be extended to include new investors,” says Metro group CEO Yip Hoong Mun.
Shares in Metro closed flat at 71 cents on Dec 18.