Q Investment Partners (QIP), the Singapore-headquartered private equity firm that connects residential living real estate to capital markets, announces its exit from two purpose-built student accommodation (PBSA) projects in Edinburgh, Scotland.
The deal for both PBSA projects is valued at approximately £40m and are the initial assets to be exited into QIP’s core plus equity fund, which has garnered traction with large private and institutional investors. The fund aims to invest capital in the acquisition of stabilised PBSA projects across the UK, with an initial AUM target of c.£150m by the end of 2022.
Together, the exit of both projects is expected to deliver annual returns of over 18% – well above the initial targeted annual returns of 16%.
“This transaction underpins QIP’s continued commitment to the UK PBSA sector. The deal also signposts our investment strategy of targeting opportunistic developments in the market. We have been on a journey to address the growing demand for high-quality student accommodation across the UK and continue to assess opportunities to further develop quality assets, with an intention to build a highly resilient and well-managed income base. We are pleased to see this strategic intent translate into strong results for our investors and partners and look forward to making further investments into the UK PBSA sector this year.”Abhinav Swamy, Head of Investment, QIP
The Edinburgh Straits Meadow project at 61-63 London Road has a total of 198 student beds and is fully operational; having achieved 100% occupancy for the 2021/2022 academic year. The delivery of the second project located at 65 London Road is subject to a forward purchase agreement upon development completion. This is expected in the third quarter of 2022, in line with the start of the 2022/2023 academic year.
From this deal, QIP continues to develop its PBSA business and solidify its standing as a leading provider of residential living real estate assets. The two successful Edinburgh PBSA exits give investors visibility of the attractive risk adjusted investment return that is available via UK PBSA, an asset class that is highly in demand by institutional investors.
“Partnering with QIP on this Edinburgh PBSA transaction reflects our commitment to deliver much-needed quality homes across the UK in a streamlined, efficient manner. With a solid track record of delivering high quality PBSA schemes with innovative shared spaces, HG Living is well placed to identify solid opportunities and maximise value for our investment partners within the student accommodation market.”Rob Greaves, Director, HG Living
With a speedy return to normality and strong demand fundamentals supporting the longer-term outlook, the UK’s post-Covid student accommodation market is attractive to both private equity firms and institutional investors. Interest in the sector continues to be driven by the broader trend of reallocation from other real estate sectors to rented residential accommodation. PBSA is arguably the most accessible subsector for buyers looking to reallocate to operational real estate, as it is mature, income-producing and comparatively countercyclical.