Sunway RE Capital, part of Malaysian conglomerate Sunway Group, has partnered with MBU Capital to invest in and manage purpose-built student accommodation (PBSA) in the United Kingdom.
Sunway said in a statement that the fund has been pre-seeded through a combination of assets and readily deployable equity, totalling £110m.
The company says they are launching the fund on the back of positive signs of recovery in the student accommodation sector. Sunway cited the latest PBSA sector update from property adviser CBRE, which showed positive demand for undergraduate places and an acute undersupply of student accommodation exacerbated by construction delays.
MBU Capital’s property team, which has previously managed over 5,000 PBSA units, will look to acquire stock predominantly within Russell Group universities – a collection of 24 well-regarded universities across the UK. Seeded assets already include units in Bristol, Manchester, and Sheffield.
MBU Capital’s chief executive officer Mohammed Iqbal said, “Pre-pandemic, student occupancy rates were typically above 97%. 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.”
Sunway RE Capital’s executive director, Dr Tan Kok Heng, said he believed the UK would most likely remain one of the world’s most popular student hotspots and that demand from overseas for high-quality education was 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,” he said.
According to the statement, the fund’s management team will build the portfolio and associated infrastructure in preparation of an exit through a REIT listing within three years.
The three-year fund is targeting to deliver an annual coupon of 6% to 8%, with an internal rate of return of 12%.
