FAR East Orchard : O10 0% on Thursday (Apr 25) announced its student housing subsidiary has acquired a 49 per cent stake of Homes For Students Limited, a purpose-built student accommodation (PBSA) operator based in the United Kingdom, for £17.6 million (S$30 million)
In a media release, the real estate company said it purchased the stake in Homes For Students’ issued and paid-up share capital from two non-management sellers.
Founded in 2015, Homes For Students operates over 40,000 beds in more than 50 university towns and cities in the UK and Ireland. It provides an integrated student accommodation management and facilities management service, and is considered the largest independent PBSA operator in the UK.
The acquisition will supplement Far East Orchard’s PBSA operating management capabilities in the UK, as it leverages Homes For Students’ operating platform, the group said. It is also in line with the group’s objective to build a lodging platform that delivers growth and a sustainable, recurring income stream.
In addition, Far East Orchard may also progressively acquire the remaining 51 per cent of Homes For Students in two stages by September 2025 and November 2030.
This is subject to fulfilling certain conditions. For Far East Orchard to acquire another 35 per cent by September 2025, Homes For Students has to hit a certain financial target by Mar 31, 2025.
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Upon completing that stage, Far East Orchard will have a call option for the remaining shares in Homes For Students that may be exercised at any time, while the remaining management sellers have a put option that may be exercised after Nov 2, 2030.
The exercise price of the put and call option will be based on the fair market value of Homes For Students at the time of exercising either option, said the group.
The key members of Homes For Students’ management team, including its founder and chief executive Martin Corbett, said they intend to remain employed as key management of the company throughout the three stages.
Alan Tang, Far East Orchard’s group chief executive, said the acquisition will propel the group to surpass its target of 5,000 beds, ahead of 2025. Far East Orchard’s PBSA portfolio currently consists of close to 3,700 beds in the UK.
It also in March announced its subsidiary has bought a plot of land in Glasgow to develop into a 273-bed PBSA by 2026.
With the completion of the ongoing development in Bristol and at the Glasgow site, the group’s PBSA portfolio will grow to approximately 4,700 beds across 15 properties in the UK.
“The continued strong fundamentals in the student accommodation sector, fuelled by domestic and international student demand, support our confidence in this sector for the coming years,” said Tang.
Shares of Far East Orchard closed down 1 per cent or S$0.01 on Thursday, before the announcement.
