Scape Student Housing Portfolio Swells to $3.3bn

In a sign of confidence for the long term fundamentals of the Australian education sector student accommodation provider Scape has merged four facilities into its larger core fund.

Scape has now shifted the assets backed by Dutch groups APG, BouwInvest and Hong Kong’s ICBCI and firm founders, into a new scheme which will see its assets under management lift to $3.3 billion.

The four facilities merged into the larger core fund include a development on Abercrombie Street at The University of Sydney and Scape’s flagship 751-bed property on Swanston Street opposite RMIT University in Melbourne.

Two more facilities at Southbank in Brisbane and at Toowong near the University of Queensland are part of the transaction.

The move brings the Scape Core Fund to a total of 24 facilities—across Adelaide, Brisbane, Melbourne and Sydney—comprising more than 13,000 student beds.

Scape Group managing director Stephen Gaitanos, who will be speaking at The Urban Developer's upcoming student accommodation webinar, said the merger had been underpinned by the depth and quality of its equity partnerships.

“Completing a transaction of this scale and complexity in the middle of Covid-19 was an extraordinary challenge for our operational teams, investment management and legal teams and also our investment partners that have evidenced their confidence in the Australian education sector,” Gaitanos said.

The merger also increases Scape Core Program’s debt facilities from $1.4 billion to $1.8 billion.

The National Pension Scheme of Korea, one of that country's largest pension funds, will also join the core fund as a new investor lodging a $300 million stake.

The South Korean fund joins AXA, Allianz, Bouwinvest and APG as the anchor investors in the Scape Core Fund, after ICBCI exited.

Scape said average returns for its investors across the four development assets had exceeded 20 per cent as an internal rate of return.

The deal follows Scape’s acquisition of Urbanest’s 6,800-bed portfolio, which was struck late last year and approved by the Foreign Investment Review Board in March.

Scape also secured the Atira portfolio, comprising 3,500 beds, originally controlled by fund manager Blue Sky and investment bank Goldman Sachs.

Scape’s national portfolio currently has an average asset age of under 4 years post the consolidation while current occupancy sits at 50 per cent despite the border closures nationally since February.

Scape responded with extensive coronavirus protocols in January, including 14-day isolation management, wellness and security apps, 24-7 concierge, hygiene and security solutions and in-building nurse support across its entire portfolio.

The student accommodation provider is currently developing a further 18 projects including Scape Carlton, a 754 student room development, Scape Franklin Street, comprising 800 student rooms and 125 serviced apartments, and Scape Lincoln Square at Melbourne University with a further 550 rooms.

Scape also recently put forward plans for four purpose-built student accommodation buildings in Kensington and Kingsford, around the University of New South Wales.