Craig Carracher is the executive director of Scape student living.
Student accommodation giant Scape has stepped up its commitment to the under-pressure sector and tapped a series of heavyweight global investors as it readies itself for a comeback in the area once students return.
The company shifted a series of development assets backed by Dutch groups APG, BouwInvest and Hong Kong’s ICBCI and firm founders, led by Scape Australia executive chair Craig Carracher, into a new scheme backed by more offshore players.
They will go into a core fund for stabilised assets that is also backed by the National Pension Scheme of Korea. The fund accepted a further $300m in equity to acquire the development assets, inclusive of the retained equity held by initial investors, although ICBCI exited.
Lenders are still backing the area with 16 of the original 17 bank syndicates topping up their commitments to a $360m debt facility, with the consortium led by CBA, Morgan Stanley and UOB with Aareal Bank lifting their exposure to the core fund.
Carracher has led a public campaign to return international students to Australia as they will be a key driver of any recovery in the beaten down university sector, with Scape well positioned to capitalise on their return.
“It is not inconsistent with allowing Australians to return to Australia to open international borders to international students that should quarantine in purpose-built student accommodation,” he added.
Carracher said hotels were “not the right solution for returning international students who have often lived here for many years, have families here and who returned to their country of origin over summer last year only to be denied return to their studies and homes in Australia”.
The Morrison government and state counterparts have been offered a safe and secure portal for international students to return, with costs covered by Scape via charter flights.
“Still, we have no pilot for returning students who are controlled by visas, are typically very compliant, will proactively go into quarantine to study while they are quarantining and will happily live in purpose-built student accommodation as their safe and secure quarantine experience,” he said.
Carracher emphasised that no students living in its student accommodation had been COVID positive despite testing almost 10,000 students at its peak in March, although that is now down to more than 7000 in the city centres of Melbourne, Sydney, Adelaide and Brisbane.
The property transaction will see the effective sale of four Scape-branded operational assets to the firm’s core fund investors. AXA, Allianz and NPS are core fund investors that were not already invested in the assets and existing investors are largely rolling over their investment into the core fund to get access to the overall national portfolio of 24 buildings and 13000 existing beds.
The deal is one of the largest real estate transactions of the year and follows the completion in May of the $2.2bn acquisition of Urbanest, evidencing investor confidence in the Australian student sector during COVID-19. That followed Scape’s acquisition of the Atira Student Living platform last September.
SCF was established last September in partnership with Scape anchor investors Allianz Real Estate, AXA Investment Managers — Real Assets, and APG Asset Management. Scape also manages two real estate funds developing 18 Scape student and rental accommodation assets across Australia, with an end value of about $4bn.
“The transaction also reflects global institutional investors’ confidence in the long term fundamentals of the Australian education sector and the PBSA sector which provides an essential support function to the attractiveness and growth of the Australian education sector,“ Scape chief executive Stephen Gaitanos said.
During COVID-19, Scape responded with extensive coronavirus protocols in January, including 14-day isolation management, wellness and security apps, 24/7 concierge, hygiene and security solutions and in-building nurse support across its entire portfolio.
