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GIC, Macquarie in largest Australian student housing deal

The Singaporean sovereign wealth fund and the Australian bank have bought a majority stake in A$150m Sydney-based student accommodation developer Iglu.

Singapore sovereign wealth fund GIC Private Limited and Macquarie Capital, the advisory arm of the Australian bank Macquarie, have jointly acquired a majority stake in Australian student accommodation group Iglu, according to a joint statement.

The exact size of the deal was not disclosed. However, the partners labeled the deal as the “largest [transaction] of its kind in the Australian student accommodation sector.”

Iglu has a portfolio valued at A$150 million (€97 million; $132 million), comprising 900 beds in both Sydney and Brisbane.

The capital from GIC and Macquarie is expected to be used to build additional Iglu-managed properties, with a focus on constructing them close to educational institutions and public transport.

The company’s first 93-bed facility is already fully occupied, while its second Sydney facility has just opened for the 2014 academic year and its Brisbane development is not slated for completion until 2016.

“Australia is now the third most popular international student destination behind the United States and United Kingdom,” Iglu director Jonathan Gliksten said in the statement. “The increase in student numbers has not been met with an equivalent increase in suitable accommodation supply.”

Chris Green, global head of Macquarie Capital Real Estate, added that as both an operator and developer Iglu is “the ideal business to work with us to build a portfolio of premium assets in the best locations across the country.”

Neither GIC nor Macquarie would comment beyond the press release, but PERE understands that Iglu has already built up a significant pipeline of developments that it could start developing this year. It is also understood the JV partners could add further capital as Iglu’s portfolio grows.

Student housing has become a popular investment asset class in the US and Europe. In May, Los Angeles-based Kayne Anderson closed a $750 million fund for the strategy.  In the Asia-Pacific, however, student housing has yet to gain much traction. In Australia, only two other student housing developers are known to have private backing: Campus Living, which is being supported by several Australian pension funds; and Sydney-based Urbanest.