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The properties, Central Park-Kensington Street and The Steps Central Park (pictured), were acquired from Frasers Property Australia and Japan-based Sekisui House (Photo: Frasers Property Australia).
Singapore sovereign wealth fund GIC has agreed to purchase two blocks of student housing in Sydney with a total of 1,043 beds for a combined sum of around AU$400 million (S$418.14 million), reported The Australian.
The properties, Central Park-Kensington Street and The Steps Central Park, were acquired from Frasers Property Australia and Japan-based Sekisui House, which put the student housing blocks on the market in 2016.
Located in the city’s AU$2 billion (S$2.09 billion) Central Park precinct, the assets attracted strong interest from would-be buyers due to its proximity to University of Sydney, University of Notre Dame and University of Technology Sydney.
In fact, the bidders include Scape, a highly active student housing operator, and the investment group supporting UniLodge, the firm that had managed both student housing blocks.
But new owner chose Iglu to run the facilities as the assets were offered with vacant possession, giving it a rebranding opportunity. GIC has also invested in its appointed operator in 2014.
Furthermore, the transaction represents the sale of the biggest property portfolio linked to the National Rental Affordability Scheme (NRAS). This made the deal more attractive as most of the beds in both properties are covered by the programme.
Under NRAS, housing providers that lease their units at affordable prices of least 20 percent below market rates will get annual financial incentives for up to ten years.
Despite some political arguments on NRAS financing student homes, the sale was approved by the Australian Federal Government given the importance of the education sector.
Both properties have an overall yield of nearly six percent, which is equivalent to those offered by other types of commercial properties.
Notably, GIC is a long-term investor in offices and malls in Australia. It had also made astute moves on trading hotels and industrial real estate in the country.
This article was edited by Denise Djong.
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