By Doug Morrison
Aberdeen Property investors buys £20m south coast block for mainstream property fund
Aberdeen Property Investors has made its first significant purchase in the student accommodation sector: Purbeck House in Bournemouth from the Cordea Savills Student Hall Fund for £20.1m.
The price equates to a net initial yield of 6.75%.
The 519-room block is in the centre of Bournemouth University’s Lansdowne campus, which is in the town’s main commercial district.
Purbeck House is let for 21 years to a subsidiary of Unite Group, which has a ‘nomination agreement’ to manage the university’s student accommodation. The property is one of the main halls of residence, both in terms of size and specification, and was built by Unite in 2005.
Aberdeen bought the block for one of its general property funds, signalling student accommodation’s move from niche to mainstream asset class.
Aberdeen director Malcolm Tibbits told Property Week: ‘Purbeck House provides a secure, long-term, index-linked income stream underpinned by both the nomination agreement with the university and the supply-and-demand demographics of the Bournemouth student market.’
Egan Lawson advised Aberdeen. Partner Bruce Clark speculated that the purchase could spark a wave of institutional interest in student halls for property funds.
Clark said the sector has been hampered by its relative immaturity, adding: ‘Yields have dropped behind yields in prime sectors but that’s down to illiquidity. Aberdeen’s acquisition will provide a marker.
‘There’s an increasing appetite for student accommodation so we could see more institutional entries to the sector, hopefully in the next six months.’
The sector has proved resilient compared with property overall. Driven by annual growth in student numbers and an undersupply of purpose-built halls, rents are forecast to grow by 4%-5% a year, said Cordea Savills, which runs one of the leading specialist funds.
Partick Carr, manager of the Cordea Savills Student Halls Fund, said: ‘It is one of the few sectors that continues to benefit from strengthening occupier demand in an environment where tenant demand for commercial property is weakening.’ (Doug Morrison, Property Week) http://www.propertyweek.com/story.asp?sectioncode=530&storycode=3148118
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