Despite the COVID pandemic and the closure of international borders, global real estate heavyweights Allianz has acquired 2 major student accommodation facilities from South African Redefine Properties for $459m.
Last year, Allianz teamed up with AXA to form a A$1.5bn core student housing joint venture in Australia managed by Scape. The JV was Scape’s first closed-end core program targeting Australian purpose-built student accommodation (PBSA), with cornerstone investor Allianz Real Estate providing an initial A$450m commitment. AXA will initially commit A$250m.
Allianz Real Estate has previously partnered with Scape Australia as the anchor investor in the Scape Australia JV 2 PBSA Development Program, alongside Bouwinvest, WPI, a Middle-Eastern sovereign wealth fund, and Scape Australia founders Stephen Gaitanos and Craig Carracher. That Fund acquired the Atira Student accommodation buildings located in Melbourne, Brisbane and Adelaide, offering 3,510 beds for around A$675m.
Now Allianz have extended their investment with the acquisition of two facilities with a total of 1391 beds from Redefine Properties. The first assets in Leicester Street contains an 804-bed facility, which was completed in 2018 while the Swanston Street project contains 587-bed was completed in May. The Leicester Street property acquired for $269m and Swanston Street for $190m.
Student Accommodation has been one of the hardest hit sectors in real estate as a result of the complete closure of international borders. Signs that the border restriction may ease provide some hope that accommodation demand from international students may return in 2021, however it is likely to take some time to recover to pre-COVID levels.
The deal with Redefine reportedly contains income guarantees which will soften the potential COVID impacts for Allianz.
Redefine’s financial director, Leon Kok, says a portion of the proceeds from the disposal will be used to settle the Australian loan facilities on the properties amounting to around AUS132 million and the remaining proceeds will be utilised to reduce Redefine’s other interest-bearing borrowings and enhance its liquidity..
The transaction will also secure the release of 60 million Cromwell Property Group shares from an encumbrance with Redefine’s intention that such Cromwell shares be sold on the open market to further advance Redefine’s stated intention to strengthen its balance sheet and bolster liquidity. These shares, which represent just 2.3% of Cromwell's register may be relevant to the current ARA acquisition proposal.
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