Scape pays $2 billion for Urbanest’s Australian student accommodation portfolio

Scape Australia is paying $2 billion for a portfolio of student accommodation units in Sydney, Melbourne, Brisbane and Adelaide.

The property deal with Urbanest – owned ultimately by the Washington Investment Board care of M3 Capital Partners’ Evergreen Real Estate – is Australia’s biggest this year.

It comes less than three months since Scape Australia paid Blue Sky Alternative Investments Ltd and Goldman Sachs Group Inc $680 million for the Atira Student Living portfolio of student dorms.

Scape Australia intends to seed a student accommodation mandate, Australia PBSA Fund, launched in September, with the Urbanest and Atira properties.

The proposed 99 Franklin Street, Melbourne, office.

Australia PBSA Fund – which aims to have $4 billion of funds under management – will be controlled by Scape Australia in partnership with Allianz Real Estate, APG Asset Management and AXA Investment Management – Real Assets.

APG was a founding partner in Scape Australia (the other was Bouwinvest).

The Atira portfolio, with 3510 beds, contains a Perth complex.

In August, we reported that Scape Australia launched a leasing campaign for an office project at 99 Franklin Street in the Melbourne CBD (artist’s impression, right).

Scape Australia was required to develop the commercial building as part of its permit to build a 48-level student accommodation complex next door (this site has previously been known in agency and planning circles as 97-105 Franklin Street).

The Urbanest portfolio

Urbanest listed its Australian portfolio in May via Savills UK.

It includes 6805 beds across 14 assets: seven in Sydney, four in Melbourne, two in Adelaide and one in Brisbane.

The oldest student accommodation complex (Brisbane) was built in 2010.

The newest, on Swanston Street, at the top of the Melbourne CBD, opened this year.

Units range from studios to twin share rooms and cluster apartments.

They are managed via nomination agreements and partnerships including with eight Australian universities.

It is estimated the portfolio returns close to $100 million in annual rent.

Scape and Scape Australia

Established in 2008, Scape opened its first facility in London’s Mile End (pictured, top) in 2012.

Today it controls more than 18,000 beds – in operation or development.

It intends to create accommodation for 20,000 beds in the US over the coming five years.

Scape Australia was co-created in 2013 by Craig Carracher – a former Minter Ellison Legal partner and general counsel of Consolidated Press Holdings – with ex-investment banker Stephen Gaitanos.

Mr Carracher said the company intends to work with the Urbanest team to expand 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,” the executive added.

Following its Urbanest acquisition, the group will control about 2500 rooms. Its development pipeline contains another 8000 dorms.

Scape Australia was represented for the deal by Moelis Australia and Morgan Stanley.

A Scape private student accommodation dorm.

Australia’s international student market: numbers and players

International education is one Australia’s largest exports.

The country ranks a close third after the United Kingdom as the preference for foreign students.

Most students initially choose the United States.

According to the Department of Education, more than 720,000 international students lived in Australia as at September, 2019 – up 11 per cent on last year.

Just over 880,000 are enrolled.

Half the demand comes from three countries: China, India and Nepal.

Real estate related to servicing international student demand – including offices tenanted to educators, through to student accommodation dwellings, are held by a mix of private investors, syndicates and institutional investors.

In Australia, Scape and Iglu – the latter which is reported to have also contested for the $2 billion Urbanest portfolio – are the major student accommodation suppliers.

GSA, Unilodge and Wee Hur are others

Investors reported to have investigated buying the Urbanest portfolio include Macquarie Infrastructure and Real Assets Inc, Cedar Pacific and Greystar Real Estate Partners LLC and GIC.

A Scape student accommodation dorm.

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Marc Pallisco

A former property analyst and journalist, Marc is the publisher of realestatesource.com.au.

Marc Pallisco