Frenzied investor appetite for student accommodation in the UK saw more than £670m of deals agreed yesterday. It comes as students wanting more luxurious accommodation, with gyms and cinema rooms, push up rents and make the properties attractive to buyers.
Buildings in 12 university cities such as London, Manchester, Oxford and Edinburgh are part of a 5,507-bed portfolio that the Guernsey-based International Mutual Fund has put up for sale through the property agent Knight Frank.
It is seeking offers of more than £400m for the assets, which together could generate £37m of income in the September 2015-16 academic year. Some rents in the capital are around £500 per week.
James Pullan, the head of student property at estate agency Knight Frank, said: “Student accommodation is undersupplied in the UK. We anticipate interest from all four corners of the globe into a sector that offers exposure to UK residential and higher education asset classes.”
He added: “This portfolio offers investors one of the last remaining opportunities to secure a platform capable of being leveraged for further expansion.”
It is expected to appeal to buyers from the UK, US, Dubai and the Far East.The sale launch came at the same time that Unite UK Student Accomodation Fund (Usaf) said it has exchanged contracts to pay £271m for eight properties from Ahli United Bank.
The purchase includes 2,100 beds across Britain, including Glasgow, Leeds and London. It increases Usaf’s property portfolio value by 16 per cent to £1.9bn, comprising 26,920 beds in 76 properties across 25 UK towns and cities.
The acquisition will be funded in cash from the proceeds of Usaf’s recent equity fund raising, and the purchase will complete by 30 June.
Mark Allan, chief executive of Unite Students – which has a 22 per cent stake in the fund, said: “We see real opportunities to drive additional value through the introduction of our brand and operating platform as well as specific asset management opportunities.”
The buying frenzy in the sector has seen £4.2bn spent on student digs or land on which to build them in the first five months of this year, according to Savills. The record figure surpassed the £2.5bn invested over the whole of 2014.
Some of the big spenders in the sector have been from overseas. LetterOne Treasury Services, backed by the Russian oligarch Mikhail Fridman, paid £532m for five central London sites, and Nido London sold a 2,375-bed portfolio to US firm Greystar Real Estate Partners for around £600m.Reuse content