Scape wins approval for $2b Urbanest deal
The country’s largest student accommodation player Scape Australia has won Foreign Investment Review Board approval to take over rival player Urbanest in a $2 billion deal.
The transaction, the largest single real estate deal to be struck last year, comes as the student accommodation sector comes under pressure from the COVID-19 pandemic. Some foreign students failed to arrive for studies this year while others have opted to return home.
The deal will close to double Scape’s existing size as it completes the takeover of 7000 student rooms and 14 operating buildings in Sydney, Melbourne, Brisbane and Adelaide.
Scape is backed by deep-pocketed global funds, including Allianz Real Estate, AXA Real Estate Investment Managers and APG Asset Management Asia.
With its heavy exposure to the foreign student market Scape had moved early in its response to the looming threat of COVID-19, putting returning students into voluntary isolation in its facilities from January 24.
The student accommodation giant is hopeful that prudence will help convince authorities to allow its facilities to remain in business if and when more stringent measures are introduced to combat the spread of the deadly virus.
“We may have been seen as overreacting in January when we introduced 14-day self-isolation requirements for our incoming students from Hubei province,” said executive chairman Craig Carracher.
“When we introduced nurses into our buildings last week it was in response to the needs of students’ parents to know that their sons and daughters are as safe as any place in Australia.
“Cities will change forever after COVID-19 as they have in so many ways over the decades and in response to community needs and demands. We expect more change in the accommodation space”
The transaction is expected to close now at the end of April.
Scape Australia operates four buildings and is constructing four more buildings in Sydney and Melbourne due for completion early next year.
A further 17 sites nationwide are under development nationally. When they are complete Scape’s portfolio will be almost 16,000 rooms.
Before the virus escalated, Scape was about 85 per cent full. Some students had been prevented from arrival during the initial bans on travellers from China.
Since then, more students had returned home to their worried parents, leaving Scape at below 70 per cent capacity. Mr Carracher expected it would fall to about 55 per cent to 60 per cent.
That vacancy could potentially allow Scape to free up space across its east coast portfolio to accommodate COVID-19 cases.
