Rush Desai Teams With Scape Founders to Establish Fund Manager Varsity Group Asia

Rushabh Desai, former Asia Pacific CEO of Allianz Real Estate, has joined forces with Stephen Gaitanos and Craig Carracher, the co-founders of rental housing developer Scape Australia, to launch Varsity Group Asia, a fund management business targeting high-growth alternative real estate sectors in Asia Pacific.

Singapore-based Varsity will focus on investment in areas such as rental accommodation, including purpose-built student accommodation; education; healthcare; and technology-driven space encompassing both data centres and offices, the company said Friday, with self-storage another area of interest. Desai will lead the business as chief executive.

The new company extends Varsity, the founding investor in Scape Australia and the investment office of Gaitanos and Carracher, beyond Australia’s shores and expands its scope of investment activity beyond the youth-oriented rental housing segment that has been Scape’s forte.

“Rush Desai has a formidable reputation in the Asia Pacific real estate industry,” Gaitanos said. “His outstanding growth credentials, breadth of relationships and entrepreneurial skills will aid him to lead the expansion of Varsity Group into the Asia Pacific alternatives real estate funds management business.”

A Year for Building

The new venture was originally conceived last December, with the founders having been at work planning the business over the past few months, according to sources familiar with the company. Varsity Group Asia offers the team the opportunity to leverage their expertise in student housing in new markets, with Desai having led some of the largest investments in Japan rental housing during his time with Allianz.

Desai said Varsity Group Asia would invest exclusively in alternative real estate, a segment he termed “significantly underserved” in the region. “Our initial focus will be the living sector, leveraging the operational expertise and investment experience of Stephen, Craig and myself in this space,” he said.

While Varsity Group Asia’s focus encompasses the entire region, the company is understood to see opportunities to create branded rental housing platforms in Japan, serving sectors including students, seniors and mainstream tenants, while also targeting deals in India, China and Southeast Asia. While the firm is open to taking on development risk, depending on the market, it will also look for opportunities to acquire core assets or take on opportunistic investments, under the right conditions.

At present, Desai is building up a team at Varsity Group Asia and putting systems in place to operate the regional company. Preliminary fundraising for the company’s ventures is expected to start up over the summer, with a fund potentially having a formal launch late this year or in early 2024.

Seasoned Dealmaker

Desai spent more than five years at Allianz Real Estate before leaving last year. During his time as APAC CEO, he built the Munich-based firm’s assets under management in the region to €8.1 billion (now $8.6 billion) or the equivalent of 10 percent of its global property portfolio.

Key deals led by Desai included Allianz’s $196 million purchase of a Beijing office project from Kailong and Goldman Sachs in 2018 and the S$634 million ($477 million) acquisition of a half-stake in Singapore’s OUE Bayfront complex on behalf of the Allianz Real Estate Asia-Pacific Core I fund in 2021.

AREAP Core I was the firm’s first fund managing third-party capital in the region, with South Korea’s National Pension Service joining the $2.3 billion strategy under the Invest Alongside Allianz programme.

In late 2021, Allianz Real Estate announced that it had formed a $2 billion Japan multifamily investment fund with Canada’s Ivanhoe Cambridge as its second strategy managing third-party capital in Asia Pacific.

Poised for Growth

Founded in 2013 as a division of the UK-based student housing developer, Scape Australia has more than A$9 billion ($6.1 billion) in assets owned and operated alongside global investors. Gaitanos and Carracher lead Sydney-based Scape as group CEO and executive chairman.

Last October, the company secured a A$1 billion ($649 million) commitment from Ivanhoe Cambridge to join investors including APG Asset Management, Allianz, Bouwinvest and AXA in the Scape Core Program, a venture which holds Australia’s largest portfolio of student accommodation.

Scape Lincoln College in Melbourne opened as the company’s 33rd Australian property and its 11th in the Victorian capital last July, with local news reports indicating that Scape is planning an additional 300-unit facility on Leicester Street in the city.

In 2021, the company’s core strategy spent A$95 million to acquire a 428-bed, three-building portfolio near the University of Technology Sydney, following a A$2 billion buyout of M3’s Urbanest in 2019.

“We are very pleased to collaborate with an industry leader like Rush Desai on our growth and diversification strategy in the Asia Pacific region,” said Scape’s Carracher. “Having a presence in Singapore will also help us expand our investor relations and sales and leasing network.”