Scape Australia has begun raising capital for Australia’s first wholesale, open-ended core real estate fund designed to hold exclusively student housing.
The Australian Student Accommodation Fund could potentially own up to A$4bn (€2.42bn) worth of purpose-built assets across major cities.
Scape Australia’s co-founder and chairman Craig Carracher told IPE Real Assets that it already has commitments “in the range of A$1bn”.
He said the fund would have its first close in the third quarter of this year.
“We have new investors and existing investors seeking to take a cornerstone position in the vehicle,” he said.
Scape Australia currently runs two development funds that have raised a total of A$1.15bn since 2015. Most of this had been deployed into building student accommodation.
“The assets we started building in 2014 and 2015 are now 100% occupied and fully stabilised,” Carracher said.
“We now have 18 buildings offering 11,000 beds, either opened or in development, with an end value of about A$4bn-plus. We see the core fund as the obvious buyer for all the assets coming through our development portfolio.”
The fund will also buy third-party assets. “Typically, we would expect to see long-term investors, as they sell out of our developments, roll their liquidity into the core fund, to retain a significant stake in the assets,” he said.
“These investors have multiple buckets of capital. The capital invested in the development of these assets expects a development risk return which is 15% plus IIR.”
But as they liquidate their investment in the development funds, Carracher said, the investors would seek to hold their assets in a core investment yielding between 10% and 11%.
Current investors with Scape Australia include Dutch pension fund investors Bouwinvest and APG, a Middle Eastern sovereign wealth fund, insurer Allianz, German investor WPI, and the real estate arm of China’s ICBC International Holdings.
Several of Scape’s investors had subsequently topped up their initial commitments.
Although Scape listed a real estate investment trust in the UK in 2013, Carracher said there was “no plan to list in Australia”.
He added: “We will have a vehicle for wholesale long-term capital seeking to invest in this growing sector.”