Second UK student housing fund suspends trading

A second fund invested in the UK student accommodation sector has suspended trading due to liquidity problems.

Student digs operator Mansion Group has suspended trading of its £283 mln (€330 mln) student accommodation fund and closed it to redemptions due to liquidity problems.

In a statement on the Channel Islands Stock Exchange, Mansion said that 'the continuing net redemptions from the Mansion Student Accommodation Fund (MSAF) Cells have exhausted the cash reserves more quickly than they can be replenished'.

The fund owns a 5,770-bed portfolio valued at around £458 mln. It had a net asset value of £282.8 mln at end-August 2013.

The statement said the fund had around 10% of its net asset value in cash or near cash in July, but the figure has fallen over the last two months due to increasing redemptions. 'The MSAF Cells are therefore unable to meet the current redemptions without the immediate sale of an asset or assets, or a refinancing.'

It said an immediate sale would not be in the interest of shareholders, and the board of directors would pursue refinancing options to raise liquidity. 'The property manager and investment manager have been working on an orderly way to restore liquidity which would most likely include the sale of some of the assets of MSAF, over a reasonable time period, in order that the true and fair value of those assets can be realised.'

The suspension follows a similar halt to trading announced in July by the Brandeaux Student Accommodation Fund, an offshore vehicle that owns a £1.2 bn portfolio of purpose-built blocks under the Liberty Living brand. The company cited 'uncertainty in the student accommodation market' precipitated by the failure of rival Opal Group.

Opal, once the UK’s largest private owner of student accommodation with around 20,000 rooms, collapsed into administration earlier this year after failing to refinance its debt.

The bulk of the collapsed Opal student housing portfolio was sold last month to US student housing operator Greystar Real Estate Partners in a joint venture with Goldman Sachs.

The package, consisting of 21 assets with a value of some £300 mln (€360 mln), was sold by Ernst & Young Real Estate Corporate Finance on behalf of a group of banks led by RBS. The package is believed to have received as many as 30 bids from a wide range of investors from across the globe.

The deal represented Greystar's debut acquisition in the UK market.