Sunway-backed PBSA fund launches
Sunway RE Capital and MBU Capital have forged a transcontinental partnership to invest and manage Purpose Built Student Accommodation (PBSA) assets in the United Kingdom (UK).
The collaboration has been pre-seeded through a combination of assets and readily deployable equity, totalling GBP110 million.
The fund is supported by positive demand for undergraduate places and an acute undersupply of student accommodation exacerbated by construction delays, according to the latest PBSA sector update from property advisors CBRE. Meanwhile, the Universities and Colleges Admissions Services (UCAS) data revealed a 2 per cent year-on-year increase in overall applicant numbers in June 2020 as well as a significant increase in applications from international students.
MBU Capital’s property team, which has presided over more than 5,000 PBSA units, will seek institutional stock predominantly within Russell Group universities. Seeded assets already include units in Bristol, Manchester and Sheffield.
“Pre-pandemic, student occupancy rates were typically above 97 per cent. Not only do we anticipate a bounce back in the near future, but the number of full-time students in the UK has reached a record level, and is only set to grow. This fund provides investors with the opportunity to capitalise on the compelling UK student market with an established and trusted partner,” says Mohammed Iqbal, CEO of MBU Capital.
“We believe the UK is most likely to remain one of the world's most popular student hotspots and demand from overseas for high-quality education is expected to rise once travel restrictions have been lifted. We’re optimistic about this sector and we’ve created a fund management team which has a track record of sourcing and delivering world class institutional stock,” says Dr Tan Kok Heng, Executive Director at Sunway RE Capital, part of the Sunway Group.
The fund’s management team will build the portfolio and associated infrastructure through best-in-class practices, in preparation of an exit through a real estate investment trust (REIT) listing within three years. The three-year fund is targeting to deliver an annual coupon of 6-8 per cent, with an IRR of 12 per cent.