The two assets that have been purchased are a 596-bed, new-build development in Central Birmingham with an anticipated value on completion of £33 million and a development of 73 studios with an end value of £6.3 million in Leeds. These schemes, together with existing income-producing properties and ongoing developments, will bring the fund’s total assets to £190 million, or more than 3,600 bed spaces across 12 schemes in 10 cities.
The Birmingham property, on Jennens Road, is directly opposite Aston University. Cordea Savills is forward funding the scheme, which is being developed by Watkin Jones, with whom the Fund has already undertaken a number of successful projects. Upon completion, due in August 2009, the development will offer students high quality en-suite accommodation in a superb location.
The Leeds property is a grade II listed building located on the edge of the Leeds University campus. It was formerly the Priory of St Wilfrid and more recently an adult education college, owned and operated by Leeds University. It is being refurbished by Springfield Mount Estates to provide 77 student bed spaces comprising a mix of self-contained studios and one- and two-bedroom apartments. Cordea Savills is forward funding the scheme through to completion, which is due in August, in time for the 2008/9 academic year. The hall will benefit from numerous period features, including its own chapel, all of which will be retained during the conversion, offering students a totally unique product in a great location.
The Student Hall Fund, which has an annualised target return of 10% over the life of the fund, was launched in 2006. By pursuing a combination of standing investments, forward commitments and forward-funding opportunities, it seeks to achieve a balance of secure income streams provided by halls let on long leases or nomination agreements, complemented by halls let directly to students and so offering the prospect of enhanced returns and capital growth.
The fund uses a stock picking strategy based on Cordea Savills’ “Winning Cities” research that identifies areas with shortfalls in supply and stronger than average rental prospects, while eliminating cities identified as experiencing oversupply, both in student and private sector accommodation.
Patrick Carr, Portfolio Manager of the Student Hall Fund, commented: “The fundamentals underpinning the Student Halls Fund are incredibly strong, which was demonstrated by its leading performance last year. Occupier demand is robust in this sector, whereas occupier demand in the commercial market can weaken during periods of economic uncertainty. As such, the fund is an interesting counter-cyclical investment.”
The strengthening fundamentals in the sector were illustrated by statistics recently released by UCAS2, the student admissions service. It said that the numbers of students applying for full-time undergraduate courses are up by 6.7%, or 26,517, compared to 2007.
Cordea Savills will be looking to raise further equity during the first quarter of this year with a view to growing the fund to its target size of £300 million plus.
Source: Citigate
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United Kingdom