AXA IM - Real Assets, Allianz and APG partner with Scape to acquire Australia’s largest student accommodation portfolio
AXA Investment Managers - Real Assets’ (AXA IM - Real Assets) Australian Student Accommodation Program Joint Venture (ASAP JV), is to acquire Urbanest, the owner of Australia’s largest Purpose Built Student Accommodation (PBSA) portfolios.
The Urbanest portfolio comprises 6,805 beds across 14 operational assets located in four major Australian cities and will now be operated by Scape, a leading global operator, owner and manager of student accommodation assets with whom the ASAP JV has an established partnership.
The Urbanest portfolio is well diversified by location, being split across Sydney, Melbourne, Brisbane and Adelaide, with an offering ranging from premium studios to affordably priced twin share rooms and apartments. The modern, institutional grade portfolio has an average asset age of circa 4.5 years and offers a wide range of on-site services and amenities for students.
The ASAP JV’s pre-eminent portfolio of student housing assets in Australia will now total 10,315 beds, with the Urbanest acquisition adding to the recent acquisition of a 3,510 bed portfolio from the Atira Student Living platform in September 2019, which marked AXA IM - Real Asset’s entry into the Australian student housing market.
The ASAP JV was formed in September 2019, with AXA IM - Real Assets, on behalf of clients, alongside Allianz, another global insurance group, and Scape, with APG, a Dutch investment manager entering more recently. The ASAP JV is an important part of AXA IM - Real Assets’ strategy of accelerating its exposure to the alternative real asset sectors in the APAC region. Globally, AXA IM - Real Assets now manages a EUR2.8 billion student housing portfolio of over 25,000 student beds across six countries, on behalf of clients, including assets acquired through its recent acquisition of the Groupe Kley platform, one of the leading operators of PBSA in France.
Australia is the third most popular country for international students, behind the USA and the UK, and is forecast to overtake the latter in the near term. It currently has eight universities in the top 125 QS 2019 World University Rankings (and five in the top 50), which have experienced a combined 8.0 per annum growth in international students over the past 10 years, predominantly from Asia. Despite its popularity, the Australian market is characterised by a relatively low provision of beds versus more mature international markets, measured by penetration rate, providing a platform for significant future growth.
Kumar Kalyanakumar, Head of Australia at AXA IM - Real Assets, says: “The Urbanest portfolio represents a rare and high quality opportunity to grow our recently established joint venture, through investing in the supply constrained and high demand Australian PBSA market. The sector has favourable demand drivers and growing institutional appeal, assets are tightly held and the barriers to entry are relatively high, particularly in Sydney, which makes this opportunity even more appealing. The acquisition provides the joint venture with immediate scale as the owner of the largest and most dominant PSBA portfolio in Australia which will benefit from both near and longer-term operational expenditure synergies. Furthermore, we expect that the consolidation of operators should lead to improved operations, branding, marketing and sector awareness.
“The acquisition continues our global approach of partnering with best in class local operators and we anticipate our relationship with Scape to be an important part of our strategy in extracting both income and capital growth from this portfolio, as well as accessing future investment opportunities.
“We have been attracted to the Australian student housing sector for some time, which is set to continue to benefit from Australia’s position as a leading destination for international students. Further, its livable cities and close economic and social ties with Asia will ensure it continues to benefit from this growing market. We have a near term ambition to grow our student housing exposure in Australia, and have identified a number of opportunities to deliver on this.”
Philippe de Martel, Head of AXA Equity Mandates (AXA IM - Real Assets), adds: “We have a high conviction for alternative real estate classes given their expected superior risk adjusted returns potential, ability to generate counter-cyclical income streams and the underlying fundamental growth drivers that support them. This acquisition again demonstrates our ability to deliver on our global expansion strategy and firmly establishes AXA IM - Real Assets as a major presence in the Australian real estate market, one of the top six pensions markets globally(8) and one of the core real estate markets in Asia.”