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EXCLUSIVE: Forum in maiden alternative RE deal in Asia(2)

The London-based private equity real estate firm has made its first alternative real estate outlay in Asia via a student accommodation investment in New Zealand

Private equity real estate firm Forum Partners has made its first alternative real estate investment in Asia, PERE can reveal.

The London-based firm has acquired a portfolio of student housing assets in New Zealand from a listed Australian property group Ingenia. The deal also marks the firm’s first investment in the country.

Forum Partners acquired the portfolio along with one of its local partners, the Sydney-headquartered property advisory firm Castle Partners, for NZ$49.4 million (€30.7 million; $38.2 million), with Forum contributing majority of the equity.

Explaining the reasons for investing in the non-traditional asset class and in New Zealand, Gregory Wells, managing director and head of Asia for the firm, told PERE: “New Zealand is a stable growing economy. Also, a number of universities are experiencing a shortage in student housing assets, driven by demand by foreign students.”

He added further: “The student market in New Zealand and Australia is now in the process of being institutionalised. As opposed to the US and UK, the assets are mostly owned by individuals and private companies.”

The portfolio consists of three student accommodation assets in Wellington, which are 85 percent leased to two New Zealand universities. The expected IRR from this investment was not disclosed. However, Wells said that typically alternative assets in markets such as Australia and New Zealand yield returns of around 20 percent.

Forum’s investments typically involve a combination of debt and equity, providing companies with growth and restructuring capital. The firm is increasingly eyeing direct investments in alternative assets, however, such as student accommodation and senior care homes in developed real estate markets in Asia.

Earlier this year, plans for a fourth Asia-focused real estate fund with an equity target in excess of $500 million emerged. Similar to the strategy followed for previous funds run by Forum in the region, the fund is expected to be used to make mezzanine loans to developers and real estate projects, with a target of getting opportunistic returns between 18 to 20 percent. It will be launched next year.