This article is from the Australian Property Journal archive
AUSTRALIA’S largest student accommodation operator Scape is forging ahead with its growth plans, spending about $95 million on a three-building portfolio from University of Technology Sydney (UTS) as it looks towards the return of international students.
The transaction includes three of the four housing residences owned by (UTS) in Sydney, consisting of 428 off-campus beds in Ultimo and Darlington.
Prime Minister Scott Morrison announced on Friday that Australia’s international borders will reopen from November for states that have hit the 80% vaccination rate mark.
Scape has said publicly that its occupancy rate across its 16,000-bed portfolio has plummeted to just 25% nationally.
Scape’s existing Sydney portfolio includes 15 assets with a total of 6,300 bedrooms. In the past two years alone it has spent nearly $3 billion in boosting its portfolio, including the $2.2 billion acquisition of Urbanest portfolio of buildings Sydney, Melbourne, Brisbane and Adelaide, as well as the Atira portfolio
Scape has backing from institutional investors including National Pension Scheme of Korea, AXA, Allianz, APG, Bouwinvest, and its own founders. It has continued to build during COVID, completing 4,000 rooms, and has a further 10,000 in the pipeline.
Under the terms of the newest deal, current UTS residents are guaranteed to be able to stay in the residences for the remaining duration of their accommodation agreements. UTS students will also have priority rights and other concessions in those residences as well as in other Scape locations, UTS vice-chancellor Professor Attila Brungs said. Scape has also offered ten annual scholarships for UTS students over the next four years that will provide for a 50% discount in accommodation fees at Scape residences.
“It will also help the university deal with the financial challenges brought about by the global pandemic in a way that doesn’t impact upon our core business of teaching and research,” Brungs said.
International education was worth $40.4 billion each year to the Australian economy as of March, prior to the first COVID-19 lockdowns. The absence of lucrative international student fees forced some universities to sell off bricks and mortar assets in a bid to recoup capital. In Melbourne, RMIT pocketed $206 million from the divestment of a CBD building on Bourke Street, while Swinburne University quickly sold off a Flinders Lane building at a loss just two years after picking it up.
UTS remains the owner and manager of an on-campus building with individual studios and shared apartments accommodating over 700 students, which it says has the capacity to meet the current demand for housing from its students.
Scape Australia managing director and group CEO, Stephen Gaitanos said, “We are thrilled to be able to acquire these assets from UTS at this time. Consistent with the Scape portfolio strategy, the location of the assets is prime and we look forward to collaborating more closely with UTS as we begin to welcome students back to Sydney safely.”
The sale is subject to government approval and is expected to be completed by the end of the year.
