SC Capital Sells Sydney Student Housing Complex to University of New South Wales

Singapore’s SC Capital Partners has sold a Sydney student housing complex for a significant premium to the acquisition price and a 19 percent mark-up to book value, according to a statement on Monday.

The facility in Kensington, east of downtown Sydney, features 233 student beds and a ground-floor commercial podium, SC Capital said Monday in a release. The accommodation portion is fully leased to the buyer, the University of New South Wales, whose main campus is less than a 10-minute walk from the property.

Acquired as one of the core-plus SCORE fund’s first investments in 2016 for A$57 million (then $44 million), the Kensington project “delivered excellent value and return” for the strategy’s limited partners, said SC Capital founder and chairman Suchad Chiaranussati.

“As an investment manager committed to key investment thematics with strong demographic driven tailwinds, we were an early mover in the highly sought after student accommodation sector,” Suchad said. “Other high conviction strategies that are a key focus for the firm include hospitality and data centres, where we continue to see a strong pipeline.”

Master Lease Secured

SC Capital secured a fresh 20-year master lease for the property at 159-171 Anzac Parade and 1 Lorne Avenue in 2019, boosting the asset’s income profile and valuation, the firm said.

Australia accounts for 10 percent of SC Capital’s $8.3 billion in assets under management, second only to Japan’s allocation of 57 percent. The firm’s properties Down Under include 2 Elizabeth Plaza, a North Sydney office building purchased from BlackRock in 2020 for A$127 million, and 2-10 Wentworth Street, a Parramatta office tower acquired from Centuria Property Funds in 2019 for A$105.3 million. Both buys were made on behalf of the open-ended SCORE fund.

The remaining Aussie properties in SC Capital’s portfolio include the Finlay Crisp Centre office complex in Canberra and a senior living facility in Queensland’s Indooroopilly suburb, both held under the firm’s RECAP opportunistic strategy.

SC Capital is in the process of being acquired by Singapore’s CapitaLand Investment. The Temasek-controlled giant’s acquisition of an initial 40 percent stake in SC Capital for S$280 million is expected to close in the first half of this year and boost the state-backed firm’s funds under management by S$11 billion.

Under the terms of the deal announced last November, CapitaLand Investment will invest a minimum of S$524 million in SC Capital’s fund strategies to support the growth of the platform, which sponsors the $3.4 billion Japan Hotel REIT.

Market Strength Still a Draw

SC Capital’s Kensington exit comes after US multi-family giant Greystar agreed late last year to buy seven Australian student housing properties from a joint venture of Singaporean developer Wee Hur Holding and sovereign fund GIC for A$1.6 billion ($1.01 billion).

The acquisition of the 5,662-bed portfolio marked Greystar’s entry into Australia’s purpose-built student accommodation market and its largest acquisition in Asia Pacific to date, with the company pointing to the strength of the student housing market Down Under as sparking the deal.

Australia saw a 19.3 percent increase in student enrolments from January to May 2024 compared with the same period in 2023, according to research by the Amber booking platform.

The supply of PBSA in Australia expanded from 3,000 rooms in 2010 to 100,000 in 2024, but the amount was insufficient to meet student demand, the report said. By 2027, Melbourne is expected to represent 30 percent of new PBSA supply, followed by Sydney (25 percent) and Brisbane (20 percent), with the three markets accounting for 75 percent of the pipeline nationally.