PROPERTY company Wee Hur has confirmed earlier news reports that it would be selling its Australian-focused purpose-built student accommodation (PBSA) portfolio for A$1.6 billion (S$1.4 billion).
In its latest bourse filings on Monday (Dec 16), Wee Hur said that the fund’s trustee Perpetual Corporate Trust agreed to sell all seven of its assets in the PBSA portfolio to global real estate investor Greystar.
This marks the successful execution of Wee Hur’s long-term strategy within the PBSA sector, said the company in a press release.
The sale announcement comes one month after it refuted an Oct 15 article in The Australian Financial Review which reported that Greystar would be acquiring its PBSA business in Australia.
The property had said previously that there have been no significant transactions related to its PBSA business in the country, and was in early-stage confidential discussions with a third party, which “may or may not lead to a transaction”.
Currently, Wee Hur holds a 50.1 per cent stake in the PBSA portfolio, while GIC-linked investor Reco Weather owns the other 49.9 per cent.
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While the transaction involves the trustee disposing 100 per cent of all the PBSA assets in the portfolio, Wee Hur will still retain an indirect stake as its Australia subsidiary will acquire 13 per cent of Greystar’s equity.
Reco Weather, however, will no longer have any interest in the fund, which consists of seven PBSA properties located in Brisbane, Melbourne, Sydney, Adelaide and Canberra.
Wee Hur will receive proceeds of about S$320 million from the sale, pending shareholders consent and regulatory approvals. The company expects the transaction to be completed within the first half of 2025.
Including Wee Hur’s remaining 13 per cent interest, which is being considered at S$120 million, the PBSA portfolio would be valued at S$439.9 million.
Given that the book value of Wee Hur’s 50.1 per cent equity interest in the fund is S$403.4 million, the proposed disposal of these assets would result in an estimated gain of S$36.6 million, according to the company’s bourse filings.
Wee Hur said that Greystar expressed their interest in acquiring the PBSA portfolio back in October 2023.
As the offer from Greystar included a sale and an opportunity to be in a strategic partnership, the company felt that the offer would enhance their position and unlock value of its remaining stake in the portfolio.
The sale price also represents a substantial uplift in the value of the PBSA properties and would allow Wee Hur to realise part of its investment in the fund, which can then be recycled and reallocated into other investments or used for general working capital purposes, read its filing.
This includes reinvesting in existing businesses or exploring high-growth areas such as its new core business, KK39, which focuses on venture capital, private equity and private-credit investments.
Following this assessment, the fund’s management committee approved the proposed sale on Dec 13, with unitholders representing more than 50 per cent of holdings voting in favour of the disposal.
Wee Hur said in a press release that this proposed divestment is the culmination of a decade of strategic growth and development. The company had entered the PBSA market with its first asset in Brisbane in 2015.
Goh Wee Ping, chief executive officer of Wee Hur’s fund management arm, Wee Hur Capital, said that this divestment would deliver superior returns for its investors.
“In 2021 and 2022, amidst global uncertainty, we acted decisively to secure liquidity and certainty through our successful recap with Reco.
“Two years later, as the PBSA market rebounded and our portfolio approached full stabilisation, we capitalised on yet another opportunity to unlock maximum value for our stakeholders through this landmark transaction,” he added.
The company also announced that it would lift its trading halt. It had previously requested for one on Friday morning.
It had closed flat at S$0.475 when it last traded on Thursday.
