Singapore’s GIC has made its third major real estate investment this month, as the sovereign wealth fund doubles down on a four-year-old bet on student housing in the UK.
Unite Students, Britain’s largest provider of purpose-built student accommodation, said Friday that it had sold two student housing properties in London to its 50:50 joint venture with the $360 billion Singaporean fund for £342 million ($472 million).
The deal supersizes the partners’ LSAV vehicle, which was first formed in early 2017 with a $283 million joint venture. The fresh backing from GIC adds to a long string of investments by Singaporean government-linked entities with the London-listed student housing provider.
“I am delighted to announce further growth of our LSAV joint venture with GIC,” said Unite chief executive Richard Smith. “This follows our announcement of LSAV’s 10-year extension in May and reflects a strong endorsement of both our sector-leading operating platform and the purpose-built student accommodation sector from GIC.”
Unite told the London Stock Exchange that the disposal of the properties — one near northwest London’s Wembley Stadium and a second in the East End’s Whitechapel district — is in line with book values and reflects an average net initial yield of 4 percent.
The two properties have 1,358 beds between them, and the joint venture will fund the acquisition through £208 million in equity from Unite and GIC and a £140 million eight-year loan facility provided by Barings.
The Wembley property, called Arch View House, serves the University Campus of Football Business and was completed for the 2020-21 academic year. Together, Arch View House and the unidentified Whitechapel property had a gross asset value of £338 million as of 31 December 2020 and stabilised net operating income of £14.2 million for the 2020-21 academic year.
Unite, the largest provider of student accommodation in Britain, said the proceeds from the disposal will go to debt repayment ahead of reinvestment into the development pipeline and further growth opportunities over time.
Unite and GIC formed LSAV in 2017 and announced their first investment in February of that year with the £227 million acquisition of a five-building, 3,067-bed student housing complex at Aston University in Birmingham. At the time, the complex was the only accommodation offered to the school’s 11,000 students and was fully occupied.
That linkage with GIC established a precedent soon followed by two more investment groups controlled by Singapore government entities, with the UK firm having now inked more than $1.1 billion in student housing transactions with investors from the city-state.
In September 2018, Singapore Press Holdings said it would buy a portfolio of 14 student accommodation properties across six UK towns and cities for S$321 million (then $233 million) from Unite Integrated Solutions, a subsidiary of the developer.
The government-backed newspaper publisher announced last month that it would spin off its media business into a non-profit entity as it concentrates on property investment.
In October 2019, Mapletree Investments, a wholly-owned subsidiary of state holding firm Temasek, acquired a pair of student housing assets with a total of 1,127 beds in Coventry from Unite for £96 million.
Investing $4B Per Month
In addition to its partnership with Unite, GIC in 2016 had partnered with Dubai-based Global Student Accommodation Group to buy a portfolio of UK student housing projects from funds managed by Oaktree Capital Management. No sales figures were disclosed, but the assets were expected to be worth £700 million when completed.
Before the transaction with Unite Students was revealed on Friday, GIC had announced on Monday last week that it would invest a further $3.9 billion with US data centre operator Equinix to expand the firm’s global network of hyperscale facilities.
During the first week in June, the sovereign fund said it would invest $733 million to acquire a minority stake in a retail-led mixed-use portfolio in India developed by Phoenix Mills. With this latest UK deal, GIC has now committed to invest nearly $4.9 billion in real estate projects globally during the first three weeks of June.