Property fund muscles in on HMO student homes
AFS Team·4 March 2013·3 min read
The SICAV fund is focusing on shared student houses around the 24-strong Russell Group of universities – which include Oxford, Cambridge and many of the country’s oldest and most popular institutions.
The Student Accommodation Opportunity Fund will be managed by Luxembourg Fund Partners and Ingman Capital Partners.
The aim is to use rental income to pay dividend of around 5% a year.
The fund will target shared houses in multiple occupation (HMOs) but will not look at the traditional approach of purchasing modern, purpose-built accommodation blocks.
This could mean the properties are easier to sell as family homes if the fund has to raise cash.
Over the next five years, the fund could generate an annualised total return of more than 10% a year, predicts Philip Ingman, chief executive of Ingman Capital Partners.
Students are becoming more demanding and are prepared to pay for better facilities, he explained, so well-managed, private student accommodation can offer high quality housing and generate attractive returns.
Each of the student properties will have the same furniture - flat-screen TVs, wireless internet and furnishings to ensure they all meet a high-quality, low-maintenance standard.
Chinese back bond
Student housing developer University Partnerships Programme has also recently revealed details of a student investment.
UPP launched a £5 billion bond backed by the Chinese government and secured against rent from 28,000 student apartments. Proceeds will refinance the company’s debts.
Around £500 million of the senior bonds will be secured against accommodation on university campuses including Oxford Brookes, York and Kent.
The refinancing project is the largest since market tracking began by data group Dealogic in 1995.
Undersupply in the student property market, low vacancy rates and stable yields have made the sector a coveted investment in recent years, attracting interest from insurers and sovereign wealth funds.
