Mapletree Said to Wind Down $1.3B Student Housing Fund After Underperformance

Singapore’s Mapletree Investments is liquidating its $1.3 billion student housing private fund targeting purpose-built US and UK assets after the strategy underperformed, according to a media report.

The Temasek-owned real estate manager has begun selling down assets from Mapletree Global Student Accommodation Private Trust, marking a retreat from a sector that had been pitched as a stable, counter-cyclical play tied to university demand, Bloomberg said Thursday.

The move is said to come after the portfolio recorded a net internal rate of return of 1.1 percent as of the end of last year — well short of the initial 12 percent target — with MGSA’s performance hit by rising interest rates and operational challenges in the US rental market, according to the news agency, which cited internal documents.

MGSA had $1.3 billion in assets under management at launch in 2017, with AUM having risen as high as $1.4 billion before falling to $700 million now, Bloomberg revealed. Mapletree declined to comment on the fund’s status when contacted by Mingtiandi.

Disposals Underway

Mapletree has already begun monetising assets from MGSA, including with the sale of two properties in Scotland to Dutch fund manager CVC DIF for an undisclosed price, as reported by Mingtiandi last April. A Mapletree representative confirmed the Scotland disposals at the time and said the company remained “positive on the student housing sector”.

Those divestments came after Mapletree in October 2024 put up for sale a set of UK student housing properties totalling 4,844 beds, following the company’s $1.3 billion acquisition six months earlier of an 8,192-bed portfolio of 31 mostly British PBSA assets in Europe from its compatriots at Cuscaden Peak Investments.

The pair of Scotland assets formed part of a portfolio of 25 UK properties acquired by Mapletree from International Mutual Fund in 2016 for £417.5 million (then $522 million), marking the Singaporean group’s first-ever student housing investments.

A year later, Mapletree injected the portfolio into MGSA, a fund backed by $535 million in equity from investors including Great Eastern Life Assurance Company, DBS Bank and UBS. At the time, the vehicle held more than 14,000 beds across 22 different cities in the US and the UK, with Mapletree Investments taking a 35 percent stake in the trust.

Mapletree, which bills itself as one of the largest owners of UK student housing with over 17,000 beds, had sought to sell some of those assets as a way to get cash back to investors at the highest rates possible amid increasing investment activity in the sector.

“While the student housing sector continues to be a core sector for Mapletree, there is a need to explore the divestment of these assets in the fund to realise returns for our investors,” Mapletree student housing CEO Matt Walker told Mingtiandi in October 2024. “Given heightened investment activities in the United Kingdom’s student housing market and an increasingly accommodative macro-economic environment, we have launched the sale process with a view to maximise returns for our fund investors.”

Aussie Opportunities

The documents seen by Bloomberg are said to show that investors will likely get back less than 80 percent of the capital they committed for MGSA’s remaining assets after they are sold. A Mapletree request to extend the fund’s life was reportedly rejected by a vote of the investors.

Despite the vehicle’s distress, Mapletree continues to pursue selective opportunities in student beds. The company entered Australia’s student housing sector last year with a purpose-built project in Perth, signalling continued conviction in markets with favourable dynamics.

Scheduled for completion in 2027, the 32-storey project is near Perth’s Edith Cowan University and Curtin University Law School. Mapletree purchased the site at 609 Wellington Street from Sydney-based investment manager Alceon, with a report by the Australian Financial Review putting the completion value at A$300 million (then $195 million).