£300M Sale And New Middle East JV Highlight Interest In UK Student Sector
The UK student accommodation sector has seen two major transactions in the past week, as other subsectors of commercial real estate remain moribund.
A joint venture between Southern Grove and Tadhamon Capital has refinanced a portfolio of three student accommodation assets with a new £133M loan and put the assets up for sale as part of a larger £300M portfolio, Property Week reported.
And a pair of Bahraini investors — Bahrain Mumtalakat, the country’s sovereign wealth fund, and fund manager Investcorp — have formed a joint venture to buy up to 1,000 student houses of multiple occupation.
Bisnow is holding an event on the continuing student housing boom on 13 July. You can attend by registering here.
Southern Grove and Tadhamon, which is also based in Bahrain, have secured a one-year, £133M loan from Maslow Capital secured against three purpose-built student assets in Guildford, Loughborough and Nottingham.
Those assets will be added to two in Colchester and Sheffield, which were refinanced last year with a £60M loan from DRC Savills Investment Management, Property Week said.
Harris Associates has been appointed to sell the portfolio for more than £300M. It totals 2,049 beds, is 80% let, and rents increased by 15% last year. The portfolio could continue to be managed under the Future Generation brand set up by the JV.
Investcorp and Mumtalakat’s JV is different, in that it relates to individual houses in multiple occupation rather than larger purpose-built student blocks.
Investcorp already owns and manages a platform of 1,200 such student houses in Nottingham, Bristol, Exeter and Leeds. Mumtalakat has bought into that platform, which aims to buy 700 to 1,000 new houses each year for the next several years.
“By joining hands with Investcorp, we believe that we would be able to further establish a best-in-class investment platform that focuses on fulfilling the increasing demand in the UK for student housing,” Shaikh Abdulla bin Khalifa Al Khalifa, who serves as chief executive of his country’s sovereign wealth fund, said in a statement.
“We believe that there is a shortage of well-managed, well-maintained and affordable student HMO assets in major UK university cities,” Investcorp co-CEO Rishi Kapoor said.
He added that a big part of its strategy would be improving the ESG credentials of the properties it buys. As is the case with offices, all UK rental homes will need to be improved to have an energy performance certificate of B or higher over the next five to seven years, or it will be illegal to lease them.