The real estate investment and fund management arm of Malaysian conglomerate Sunway and MBU Capital have created a fund to invest in the UK student housing sector.

Sunway RE Capital and the London-based investment firm have seeded the purpose-built student accommodation investment fund with assets and readily deployable equity worth £110m (€126.3m), the companies said.

The three-year fund’s seeded assets include units in Bristol, Manchester and Sheffield. The plan to grow the portfolio in preparation of an exit through a real estate investment trust listing within three years.

The fund is targeting to deliver an annual coupon of 6-8%, with a 12% internal rate of return.

Tan Kok Heng, executive director at Sunway RE Capital, said: “We believe the UK is most likely to remain one of the world’s most popular student hotspots and demand from overseas for high-quality education is expected to rise once travel restrictions have been lifted.

“We’re optimistic about this sector and we’ve created a fund management team which has a track record of sourcing and delivering world-class institutional stock.”

Mohammed Iqbal, CEO of MBU Capital, said: “Pre-pandemic, student occupancy rates were typically above 97%. Not only do we anticipate a bounce back in the near future, but the number of full-time students in the UK has reached a record level, and is only set to grow.

“This fund provides investors with the opportunity to capitalise on the compelling UK student market with an established and trusted partner.”

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