Sunway RE Capital partners MBU Capital to invest in and manage UK student dorms

By Valerie Kor / EdgeProp Singapore | March 16, 2021 5:20 PM SGT
SUNWAY - EDGEPROP SINGAPORE
Sunway RE Capital is under Malaysia's Sunway Group (Photo: Sunway Group)
SINGAPORE (EDGEPROP) - Sunway RE Capital is partnering with London-based private investment group MBU Capital to invest and manage Purpose Built Student Accommodation (PBSA) assets in the UK. The collaboration is pre-seeded through a combination of assets and readily deployable equity, which totals around GBP110 million ($205 million).
According to the latest PBSA sector update from property advisors by CBRE, the fund is supported by a high demand for undergraduate places and a low supply of student accommodation, exacerbated by construction delays. Overall applicant numbers in June 2020 increased 2% y-o-y, according to data by Universities and Colleges Admissions Services (UCAS).
MBU Capital’s property team has presided over more than 5,000 PBSA units. It will seek institutional stock predominantly within Russell Group universities. Seeded assets currently include units in Bristol, Manchester and Sheffield.
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“Pre-pandemic, student occupancy rates were typically above 97%. Not only do we anticipate a bounce back in the near future, but the number of full-time students in the UK has reached a record level, and is only set to grow,” says Mohammed Iqbal, CEO of MBU Capital. “This fund provides investors with the opportunity to capitalise on the compelling UK student market with an established and trusted partner.”
Tan Kok Heng, executive director at Sunway RE Capital, which invests in listed and unlisted funds established in Singapore, believes that the UK remains as one of the world’s most popular student hotspots. “We’re optimistic about this sector and we’ve created a fund management team which has a track record of sourcing and delivering world class institutional stock,” he adds.
The fund’s management team will build the portfolio and associated infrastructure, in preparation of an exit through a real estate investment trust (REIT) listing within three years. The fund is targeting to deliver an annual coupon of 6%–8%, with an internal rate of return of 12%.