UK – Gravis Capital Partners (GCP) has launched the UK market's first student accommodation real estate investment trust (REIT), seeded with a single East London asset and targeting a 5.5% income yield.
GCP partner Tom Ward said: "It's too early to put numbers on the fundraising, but we're upbeat."
Although much of the investor interest has to date come from family offices and wealth managers, Ward said he expected to see more institutional investors target the REIT when it acquires two more student development projects in Greenwich and Shoreditch.
Bill MacLeod, an investor relations adviser to the firm, contrasted the closed-end specialist REIT – which by virtue of its structure is required to distribute 90% of its income – with open-ended offshore fund structures.
He said a combination of regulatory oversight gave pension funds confidence in the structure's transparency.
Although Ward acknowledged UK pension schemes'' reluctance to invest in listed real estate because of equity volatility, he said they would overcome their aversion because student accommodation tended to be less volatile than most other real estate segments.
GCP's three existing and planned assets are located in parts of London where international students account for as much as 75% of the total student population.
It hopes to capitalise on demand from middle-class students from emerging markets for a "living experience" in a shift away from cluster-studio assets towards accommodation based on the hotel model.
Ward said the firm had not ruled out targeting locations outside the capital – including Brighton, Cambridge and Oxford – given a sufficiently attractive imbalance between demand and supply.
"But a case would have to be made," he said.