Student accommodation developer Scape shifted its investment strategy, establishing Australia’s first $6-billion open-ended property fund that is already winning overseas interest.
The fund received $700 million in funding from South Korea’s National Pension System in January.
Of that, $250 million was used to acquire six Scape-developed assets and two development sites worth $1.9 billion.
UBS Asset Management has also joined the fund alongside existing partners APG, Bouwinvest and Ivanhoé Cambridge.
The combined equity investment of $1 billion, supplemented by $900 million in debt refinanced in 2024, has facilitated the significant portfolio expansion.
The structure represents an evolution of Scape’s core fund, which was initially established in 2019 as a closed fund with a 2030 expiry date.
The current portfolio encompasses 16,000 beds, and access to a future 4,000-bed pipeline.
The fund maintains authority to pursue development activities up to 20 per cent of its total value.
“This comes at a very exciting time, following the successful journey we have been on for the past 10 years, with our current portfolio at full occupancy and a clear need for more well-designed and located PBSA rental accommodation in Australia,” Scape co-founder and chief executive Stephen Gaitanos told media.
The purpose-built student accommodation sector in Australia has experienced substantial growth in the past few years.
Capacity has nearly doubled to 132,700 beds during the past decade, according to Property Council of Australia data.
The sector anticipates continued expansion, with a pipeline of 30,000 new beds projected for the next five years.
The fund’s open-ended structure, which maintains leverage at 40 per cent, offers enhanced flexibility for investors, the company said.
“Under the new open-ended regime, investors can subscribe or redeem every quarter. A significant equity commitments queue has already built-up showing investors’ confidence in the structure,” Gaitanos said.
Scape’s expansion strategy extends beyond student accommodation. The company established its build-to-rent platform, Rent-to-Live Co, in 2023, supported by Dutch pension fund APG and Bouwinvest.
Its flagship build-to-rent project, the $1.5-billion Timberyards development in Sydney’s Marrickville, is to deliver 1190 homes across seven buildings.
As well, Scape has progressed to the second round of bidding for Brookfield’s $3.50billion senior living business, Aveo.
The company has appointed Macquarie Capital and Deutsche Bank as advisers, with binding offers expected by March, 2025.
The Aveo acquisition would add significant scale to Scape’s property portfolio.
Aveo currently operates 65 villages with more than 10,000 units on the East Coast and hold a development pipeline of more than 3000 units.
With a 94 per cent independent living unit occupancy rate and position as the sector’s second-largest provider, commanding 6 per cent market share, the acquisition would establish Scape as a major player in Australia’s senior living sector.
The company joins ASX-listed Charter Hall and two other undisclosed parties as headline bidders. Potential capital partners, including AustralianSuper, are expected to align with bidders as the auction progresses.
