Successful completion of an acquisition of 50 per cent of a prime purpose-built student accommodation block

Tadhamon Capital has announced the successful completion of an acquisition of 50 per cent ownership alongside Watkin Jones, of a prime purpose built student accommodation block. The block, Athena Hall, is located in Ipswich in the UK, about 113 km northeast of London.

The transaction, with a value of 26.7 million ($41.3m), was co-arranged by Tadhamon Capital and Apache Capital Partners, a Bahrain- and London-based UK real estate investment manager. The transaction was concluded at a net initial yield of 7.3pc and will distribute a quarterly net cash yield of 8pc a year to investors.

Athena Hall was developed by Watkin Jones, a UK-based real estate developer, in 2010 and is part of a new university campus benefiting from a five-year rental guarantee across the whole property provided by Watkin Jones and a 30-year nomination agreement with University Campus Suffolk. The property is the only purpose built student accommodation property on campus and current demand significantly outweighs supply.

Rent currently charged to students is estimated to be 20pc below open market rental values, allowing for strong rental growth potential on review.

The property comprises 590 rooms, six retail units and a dedicated car park, and will be operated and managed by Fresh Student Living, a specialist student accommodation company and a subsidiary of Watkin Jones. “This deal follows our acquisition of a special needs school in Hampshire in the fourth quarter of 2010 and forms part of our social infrastructure strategy,” said Tadhamon Capital chief executive Waleed Abdulla Rashdan.“The whole team has worked very hard to conclude the transaction, especially in light of the current global financial crisis.“

Tadhamon Capital and Apache Capital have selected social infrastructure as our core strategy as we believe the sector will continue to be resilient in uncertain times, with growing institutional interest, and allows us to provide secure income-generating investment opportunities to our investors, with targeted distributions of 7pc to 8pc a year. 

“Social infrastructure is one of few asset classes that provide meaningful income distribution, and is highly attractive when compared with equities, gilts and cash yields, especially when interest rates in the UK, currently at 0.5pc, are likely to remain low for the foreseeable future,” he said.

“We are currently looking into our second student accommodation property which is located in a prime central London location with a capacity of more than 250 students, and hope to complete this transaction in the first quarter of this year. “Under the same platform, we currently also have a number of transactions in the pipeline which are relatively advanced and we hope to complete our next transaction soon thereafter,” he added.