Scape acquires $2b portfolio from Urbanest

Scape acquires $2b portfolio from Urbanest

13 December 2019

In the biggest single property transaction this year, student accommodation giant Scape Australia has acquired the $2 billion portfolio of dorms run by Urbanest.

Student accommodation is coming into its own on the back of rise of tertiary education as one of the nation’s major export earners and it has become a major asset class, sought out by infrastructure and property investors.

The deal follows on the heels of its $680 million acquisition of the Atira portfolio of facilities controlled by funds manager Blue Sky and investment bank Goldman Sachs, a deal which made Scape the largest student accommodation player in the country and also displayed Scape’s capital raising abilities.

In a combination with its operational platform and multi-billion-dollar development pipeline, the latest purchase puts Scape in a powerful position as Asian and European pension funds back its expansion.

The Urbanest portfolio comprises 6805 beds across students dorms in Sydney, Melbourne, Brisbane and Adelaide. Its owner is M3 Capital Partners’ Evergreen Real Estate, which is backed by the Washington State Investment Board.

The Urbanest and Atira portfolios will be held in a new core Australian PBSA Fund launched by Scape in August for purpose-built student accommodation.

The fund was set up in September in partnership with Allianz Real Estate, AXA Investment Managers, and APG Asset Management.

“We look forward to working with the Urbanest team to grow the opportunity at this exciting time for student accommodation in Australia and globally.

“We are confident that the combination of our businesses and our people will offer the Australian education market the scale required to satisfy the growing demand from our students, universities and the broader education sector to support Australia’s leading position in the global education market,” said Scape’s executive chairman Craig Carracher.

Savills UK ran the process to sell the Urbanest portfolio while Moelis Australia and Morgan Stanley advised Scape.

The first of the Urbanest buildings opened in Brisbane in 2010 and is considered “first generation”. The most recent buildings opened on Swanston Street in Melbourne and Darling Square in Sydney are a further step up.

Scape will now become the country’s largest purpose-built student accommodation provider with 2,500 student rooms open already and more than 8,000 rooms in development.

According to The Urban Developer, approximately 430,000 foreign students select Australia each year for international study, making it the third most sought-after destination globally, behind only the UK and the US.

The number of people applying for a higher education visa from outside Australia increased by 118 per cent between 2010-11 and 2016-17, with international students representing 32.4 per cent of the full-time undergraduate population.

Despite the rampant demand only 35,000 new PBSA beds have been completed in over the last five years at an annual growth rate of 7.8 per cent, according to the latest research from property consultants Urbis. In total, there are an estimated 105,000 PBSA bed spaces nationally.