Investors circle rare UK student portfolio prize

Investors have a month left to submit offers for Ardent, probably one of the last in a series of major student accommodation portfolios to come to market in the UK.

Knight Frank is marketing the Ardent portfolio and expects to secure a sale for in excess of £400 mln (€550 mln) by the end of the year. The deadline for offers is 24 July 2015.

The property adviser is using its global platform to sell the Ardent portfolio on behalf of the Guernsey-based International Mutual Fund (IMF) which is in suspension due to liquidity issues.

Ardent comprises accommodation for 5,507 students in 25 properties across 12 cities and university towns in the UK. Effectively fully let, the portfolio generated gross rental income of almost £33 mln for the 2014/2015 academic year, which is expected to rise to an estimated £37 mln for 2015/2016.

Ardent is in good shape, according to Sam Ball of Knight Frank's student accommodation department. All properties have been acquired within the last eight years and refurbished on purchase. A third of the portfolio by value is located in London and other key locations include Nottingham, Manchester, Birmingham, Leicester, Glasgow and Edinburgh. The portfolio spread gives potential access to 710,000 full-time students.

Global interest
'We have already had global interest from all sorts of different players from the Far East, Middle East, North America and Australia; literally, global platforms coming into the UK,' Ball told PropertyEU.

In terms of investor type, Ardent will likely appeal to a mixture of student accommodation funds, existing operators, private equity and institutions. The key is quantum, according to Ball. 'Ardent offers investors the opportunity to purchase immediate scale within key university locations, and is arguably one of the last big student portfolios that will come up for sale for quite some time.'

Big deals
Most other portfolios of comparable size are not at the marketable stage or have already traded, the majority changing hands in a flurry of activity this year.

Some £2.3 bn was invested in UK student accommodation in the first three months alone as cross-border capital snapped up large portfolios to profit from continued rental growth in the sector.

In March Canadian pension investor CPPIB paid £1.1 bn for the 42-asset Liberty Living portfolio, while Russian investor LetterOne shelled out some £532 mln for the 2,170-bed Pure portfolio and £83 mln for four development sites packaged as the Union portfolio. Goldman Sachs weighed in weeks later by buying the 5,890-bed Westbourne portfolio for £540 mln.

The London-based Pure transaction commanded the highest price, £245,000 per bed, while the much larger Liberty transaction translated into a modest £66,000 per bed.