Scape doubles down, again, on student accommodation with big UTS buy
Student accommodation operator Scape Australia’s turbo-charged growth has accelerated further with the acquisition of a three-building, 428-bed portfolio from the University of Technology Sydney for an amount understood to be about $95 million.
Scape – by far the largest operator of student accommodation in Australia – has spent almost $3 billion in the past two years to buy the Urbanest and Atira portfolios and is set to spend another $1 billion developing five properties near the University of NSW.
Executive chairman Craig Carracher, who declined to confirm the purchase price, said the UTS portfolio was an excellent fit for Scape, occupying prime inner-city locations at Ultimo and Darlington while providing a lower-cost option for its clients.
Mr Carracher said Scape remained bullish about the long-term future of student accommodation in Australia despite COVID-19 destroying its core market of international students over the past two years.
There is also deep uncertainty about when they will return in large numbers, although Mr Carracher said Scape was working closely with the NSW government on a pilot plan to bring international students back that he hopes will start in November.
In their absence, occupancies across the 12,500 bed Scape portfolio has fallen to an average of about 25 per cent nationally: 17 per cent in Victoria, 25 per cent in NSW and 35 per cent in both South Australia and Queensland.
“If we don’t get students coming back by December, we’re expecting to see occupancy across the whole portfolio drop down to 10 to 15 per cent,” Mr Carracher said.
But he remains optimistic. “They will return and the underlying economics remain overwhelming on the demand side.
“Residential product has largely been leased domestically now so the main competition where 90 per cent of students have to go is closed out.
“Homestay is no longer a safe option for anyone. So demand is up, up, up, and supply is not able to keep up.”
The acquisition, subject to Foreign Investment Review Board approval, was made by Scape’s Student Accommodation Core Program.
Capital partners include Allianz Real Estate, AXA Investment Managers – Real Assets, APG Asset Management, Bouwinvest and Scape’s founders.
UTS vice-chancellor Attila Brungs said that as part of the deal, current residents are guaranteed occupancy. UTS students will have priority rights and concessions in those residences and other Scape locations.
“We feel our students will be well looked after, with Scape having generously also offered 10 annual scholarships for UTS students over the next four years, which will provide for a 50 per cent discount in accommodation fees at Scape residences,” Professor Brungs said.
“It will also help the university deal with the financial challenges brought about by the global pandemic in a way that doesn’t impact upon our core business of teaching and research.”
