Melbourne University woos investors for student dorms
The University of Melbourne is set to become a bigger player in the fast-growing student accommodation sector as it looks to tap institutional investment for at least two facilities in inner-city Melbourne.
The university has brought in advisory group Flagstaff Partners to run an investment process on the two new student accommodation developments with a combined portfolio of close to 1000 beds.
The investment is to be struck on a 40-year term, according to senior industry sources.
The value of that opportunity – the income return from the facilities over four decades – could be worth as much as $250 million on some estimates.
The proposed deal is not a build-own-operate-transfer – commonly known as a BOOT – scheme often seen in public private partnerships.
Rather, it is more akin to a licence arrangement, insiders said. The University of Melbourne was unable to comment on Tuesday.
In consideration is a site on Royal Parade in Parkville which the university acquired from the Salvation Army four years ago and is now redeveloping.
A second site is closer to the university at Lincoln Square and is understood to be the same project that Financial Review Rich Lister Paul Little and his wife Jane Hansen are supporting.
The couple are donating $30 million for a scholarship program to house and support disadvantaged students over their undergraduate degrees.
The university will also stump up $70 million to develop Little Hall, a student residence with capacity for 669 students.
A third residential site at the university’s regional Dookie campus could also be included in the process run by Flagstaff. As well, successful investors could potentially get access to the university’s longer-term pipeline.
Melbourne-based Flagstaff has done similar deals for several other universities including the ANU and the University of Tasmania as the advisory firm extends its credentials as a corporate finance adviser into the tertiary education sector.
The University of Melbourne has brought the private sector in even more directly in another recent project involving a component of student accommodation.
A Lendlease-led consortium, including Singapore’s GIC, will develop a $500 million mixed-use project for the university in inner-city Carlton.
To be known as an innovation precinct, the 62,000-square-metre development includes commercial space as well as retail areas, childcare, collaboration space and accommodation for 528 students.
The consortium includes Urbanest, which will own and operate the student digs, and Spotless as the facilities manager.
It is a busy period for Urbanest, which is also in the final stages of a three-year master-planned development of the Darling Square precinct in Sydney where it is partnering with Lendlease, Buildcorp and AJ+C architects
The 664-bed development on Darling Drive will be connected via a bridge to existing property Urbanest Darling Square.
