The Government of Singapore Investment Corporation (GIC) has set its sights on growing its exposure to UK student housing with the formation of one joint venture and the extension of another.
According to its partner UNITE Group, the UK’s largest developer and manager of student accommodation, GIC and UNITE expect to invest £330 million (€407.6 million; $536.06 million), including debt, in London properties via the newly created London Student Accommodation Joint Venture (LSAV).
To be owned on a 50:50 basis, the venture will have the right of first refusal on all UNITE London developments and has been seeded with two properties. These will be added to over time as the firm develops out its pipeline through the venture’s expected maturity in 2022.
“Development opportunities in London remain compelling, and the group already has potential development projects in solicitors’ hands or at an advanced stage of negotiation that would account for nearly 75 percent of LSAV’s planned development spend, if pursued,” UNITE said. It noted that the partners plan to commit a further £200 million of equity to the venture once the existing capital has been deployed.
The partners also are extending the life of Unite Capital Cities (UCC), a joint venture launched in 2005 that currently manages more than £377 million in assets, from its original maturation date of March next year to 2022. During this time, UNITE said it would reposition and refinance the JV’s assets, selling approximately £100 million, or 25 percent, over the next four years. The sales are intended to enable UCC to refocus its efforts on its London properties and on deleveraging the portfolio.
“From a strategic perspective, the transaction allows UNITE to accelerate its investment in London development activity at a time when potential returns are particularly compelling and the scale of opportunity is greater than UNITE could fund alone,” UNITE stated. The firm will act as property manager, asset manager and development manager for the duration of both JVs.
GIC’s investment with UNITE is a further example of large institutional investors forging ties with established, specialist operating partners that give it pre-emptive rights on development pipelines. In another recent example, the Canada Pension Plan Investment Board further capitalised a joint venture with Sydney-based Goodman Group that benefits from a right of first refusal on everything the logistics developer-cum-investment manager develops in China.