Infratil Ltd has conditionally sold its 50% interest in the Australian National University’s purpose-built student accommodation concession to 2 AMP Capital Ltd funds after failing to broaden the platform.
Infratil said in December it was reviewing the investment. The sale agreement is conditional on counterparty consents. Subject to satisfaction of those conditions, it should be completed in a fortnight.
On completion of the transaction, Infratil expects to receive cash proceeds of about $A162 million, with final proceeds adjusted for normal working capital. It bought its stake in 2016 for $A82.5 million.
The Australian National University in Canberra awarded Infratil Ltd & the Commonwealth Superannuation Corp a 30-year concession for the net rental revenue from 9 on-campus purpose-built student accommodation residences, comprising about 3760 beds, including a 500-bed student residence that was under construction. The portfolio has been managed by HRL Morrison & Co Ltd.
Morrison executive director Mark Mudie said on Monday: “We continue to believe that the ANU portfolio is the standout portfolio in the on-campus purpose-built student accommodation sector in Australia in terms of both scale & quality. However, the broader platform that Infratil intended to develop using the ANU portfolio as a cornerstone has not eventuated.
“This conditional sale agreement enables ANU to continue to grow its student accommodation offering under new ownership and allows Infratil to focus its investments on its established platforms targeting renewable energy, retirement services and growth in data & connectivity.”
Since acquisition in 2016, Morrison has transitioned the portfolio to private sector facilities management and expanded it to include an additional 450-bed residence in response to unmet demand from students.
AMP Capital has bought the concession for its AMP Capital Diversified Infrastructure Trust & AMP Capital Core Infrastructure Fund.
Infrastructure trust portfolio manager & investment director Brad Williams said: “The transaction is valued at over $A700 million and includes a 34-year concession over 4184 beds across 10 existing residences on the ANU campus in Canberra.
“AMP Capital has been successfully invested in university student accommodation partnerships for over 15 years. The ANU portfolio represents an exciting opportunity to grow our student accommodation platform to over 5000 beds, adding to our recent University of Melbourne transaction in late 2018 and our partnership with the University of Sydney which began in 2003.
“The student accommodation sector is one of our core strengths and we are delighted to be able to continue to deliver value in this sector for our clients. Our largescale portfolio of beds now provides our investors with access to long-term inflation-linked contracts with Australia’s top 3 ranked universities.”
In November, the AMP Capital Diversified Infrastructure Trust entered into a 40-year student residences contract with Melbourne University on 954 beds in 2 facilities being refurbished & constructed at the university’s Parkville campus. The trust will also be the preferred funding partner for any additional student residence projects to support the university’s growth.
The 2 residences, 303 Royal Parade & Little Hall, will be the first residences developed & operated under the university’s brand & its new accommodation offer.
That concession includes the responsibility for facilities management services such as building maintenance, which has been outsourced to Spotless Ltd for 40 years. The university retains operational responsibility, including marketing & day-to-day student pastoral care.
The AMP trust has owned a 650-bed Sydney University Village facility for 15 years.
9 November 2018: Infratil revises view of Australian student accommodation portfolio
5 August 2016: Infratil enters student residence deal in Canberra
Attribution: Infratil, AMP.