Real estate investment trust (Reit) Inkunzi Student Accommodation Fund (Isaf), which will list on the JSE in November, will acquire nine purpose-built, student accommodation assets valued at R1.7-billion.
The acquisition will be settled through a combination of debt financing, at 25% of the value, and from the proceeds raised through the company’s intended listing by way of private placement towards the end of the year.
The acquisitions are expected to complement Isaf’s existing portfolio of properties, which comprise established, purpose built, high-quality student accommodation with established relationships with their respective resident universities.
“Inkunzi founding member Kameel Keshav said the company’s focus was not only on the quality and distribution yield offered by these assets, but also on securing a robust pipeline of purpose-built buildings in key nodes going forward.
“We ticked all the boxes in aiming to provide prospective investors with an attractive and strong listing distribution yield, a high-quality portfolio, as well as immediate access to a pipeline of over R2.5-billion,” he said.
CEO Owen Nkomo said: “We decided to buy purpose-built assets that are suitable for students to study successfully. These assets are fresh and very different to what is found in the central business district, where buildings are older.”
Nkomo noted that Isaf was planning to acquire more assets, pointing out that it wanted to be the leading brand for purpose-built student accommodation across the country.
He explained : “The South African student accommodation market demonstrates a significant structural undersupply with a 75%, or 200 000, bed shortage. Owing to the less cyclical nature of demand and underlying supply demand dynamics, the sector is less sensitive to the performance of the underlying economy.”
Nkomo added that the multitenant nature of quality student accommodation, backed by university leases, bursary providers and parental financial guarantees translated into a low-risk default profile.
He noted that the #Feesmustfall movement has ensured that government starts putting work on the ground to make sure they can assist students, who are demanding, rightly so, to be supported when they go to university,” he said.
The company, meanwhile, has appointed Pieter Scholtz as CFO to assist with structuring and process implementation, along with efficient financial management and day-to-day operational authority.
He will join Isaf from JSE-listed real estate development fund Acsion.
