APG in A$220m Australian student housing debut

The Dutch pension manager has tied up with Scape Student Living to develop, own and manage student accommodation facilities across Australia for the first time.

Dutch pension manager APG Asset Management has formed a A$220 million (€155 million; $176 million) joint venture partnership with the Australian unit of Scape Student Living, a leading student accommodation platform with roots in London to develop, own and manage direct-let student accommodation facilities across Australia. This is APG’s maiden student accommodation investment in the Asia-Pacific region. 

Sachin Doshi, head of private real estate investments for Asia-Pacific at APG, said that the investment is consistent with the firm’s strategy to selectively target sectors that are in the early stages of becoming institutional in the region, but provide compelling long-term underlying fundamentals.

“With tertiary education being a key anchor of Australia’s economy, continued growth of international students from Asia and a chronic shortage of purpose-built student accommodation, we strongly believe that the sector provides superior risk-adjusted returns potential and is poised to become a mainstream asset class in the coming years. In Scape, we have a formidable new entrant into the nascent Australian student accommodation landscape,” he added.

Under the venture, the two firms will target to develop 5,000 beds in close proximity to major universities in Sydney, Melbourne, Brisbane, Canberra and Adelaide over a period of time. The JV has already acquired two sites in Melbourne, close to RMIT University. 

The partners may also consider an expansion to other cities in Asia-Pacific in the future, but the initial focus remains on the Australian market.

To execute the JV’s plans, Scape has assembled a team in Sydney led by Stephen Gaitanos. The team will include design and development personnel from Scape’s headquarters in London.

“Together with APG we are hugely excited about developing Scape in key markets across Australia.” said Nigel Taee, co-founder and executive chairman of Scape Student Living. “We offer a new kind of student experience – an environment buzzing with energy and creativity where students can live, learn, work and play. This philosophy along with APG’s deep and wide knowledge of the real estate sector in Australia makes for a very compelling student accommodation platform.”

APG has prior experience investing in this alternative asset class elsewhere in the world. In July 2013, LaSalle Investment Management and APG tied up to provide developers whole loan construction finance for student housing and residential developments in the UK via a £238 million (€314.68 million; $356.8 million) real estate fund. ‘LaSalle Residential Finance I’ offered loans between £15 million and £60 million, typically up to 75 percent loan to cost.

In Asia, APG’s most recent investment was in the logistics sector in China, committing $650 million to e-Shang, a Shanghai-based developer and operator, in May 2014. As of December 2014, APG had more than €400 billion assets under management.