Aberdeen Property Investors enter student accommodation sector (UK)

Aberdeen Property Investors, advised by Egan Lawson, has made its first significant acquisition in the student accommodation sector, with the purchase of Purbeck House in Bournemouth from the Cordea Savills Student Hall Fund for £20.1 million (approx. €22.9 mln.), equating to a net initial yield of 6.75%.

Purbeck House

Purbeck House was purchased for €22.9 million.

Purbeck House comprises a modern purpose-built development of 519 student rooms in the center of Bournemouth University's Lansdowne Campus, which is also the main commercial district for the town. The property is let for a further 21 years to a subsidiary company of Unite Group Plc which has a nomination agreement with the University to manage student accommodation requirements. The property is one of the University's principal halls of residence, both in terms of size and specification, and was built by Unite in 2005.

Malcolm Tibbits of Aberdeen Property Investors said: "This marks our first significant acquisition in the fast-maturing student accommodation market. Purbeck House provides a secure, long term, index-linked income stream underpinned by both the nomination agreement with the University and the strong supply and demand demographics of the Bournemouth student market."

Patrick Carr, manager of the Cordea Savills Student Halls Fund, one of the leading institutional student accommodation funds in the UK, comments: "This sale highlights the ongoing maturity of the student sector for institutional investors seeking to obtain diversification and rental growth within their portfolios. 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. We're delighted to see a highly credible new institutional investor enter the sector, whilst providing us with a strategic opportunity to rebalance our portfolio."

The student accommodation market continues to prove resilient relative to mainstream property sectors. The sector benefits from strong occupational characteristics, driven by a consistent annual growth in student numbers and in many locations, an undersupply of high quality, purpose-built accommodation. General industry rental forecasts for the sector are positive, being in the region of 4-5% per annum. This compares very favorably against the outlook for the commercial sector, where the IPF consensus forecasts negative annual rental growth over the next two years.

CB Richard Ellis and King Sturge acted for Cordea Savills.

Source: Aylwin Communications

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