recent property acquisition has provided new investment for fund
Brandeaux has reopened its Isle of Man-domiciled Student Success fund, which has been closed to new investors since 2003 due to a lack of investment opportunities.
Roger Boyland, chairman of Liberty Living, which manages the £130m Brandeaux Student Success fund, said: "We had strong inflows into the fund at the time. We were not able to place any more money so we closed Student Success to new investments."
The reopening of the fund follows its recent acquisition of properties in Manchester, Glasgow and Aberdeen for a total of £57.25m. Its existing accommodation is based in Leicester, Leeds and Coventry and Boyland said the fund is looking to potential investments that will take its portfolio of beds to more than 6,000.
Boyland said Student Success seeks an annualised total return of between 8% and 10% over a five to 10-year investment term. He asserted that since the launch of the fund in December 1999, it has delivered an average annualised return of 9.17% and a total return of 66%. The majority of this total return has been through rental income with the remainder coming via capital growth.
"We spotted the opportunity offered by student accommodation in 1999 when it was not on investors' radars," added Boyland. "It was a fragmented market but universities were obliged to provide accommodation to first-year students. Universities also used decent accommodation as part of their marketing. The problem was that universities were short of funding to spend on accommodation."
In 1999, Liberty Living and Brandeaux started investing in purpose built accommodation for university students. "The market was attractive because there was more demand than supply," said Boyland.
"Rather than the traditional halls of residence that comprised a long corridor with single rooms on either side, our accommodation has three, four or five bedrooms each with en suite bathrooms. Each purpose built accommodation has a shared kitchen and a sitting area like a flat."
Liberty has 19 accommodation sites, each of which house between 200 and 600 students. The accomodations have swipe cards, CCTV and receptions for added security as well as internet access.
An attraction of investing in student accommodation, argued Boyland, is that it does not face the cyclical performance of other parts of the property market, notably residential houses. "We have virtually 100% occupancy rates with our student accommodation.
"Even though some students drop out from university after the first term, we are always able to fill the rooms. The fund also has a very low level of bad debt. Last year, we had bad debts of under 0.5%. We collect 50% of the year's rent at the start of the student year in September. Another 30% of the rent is collected at the start of the second term and the remaining 20% is paid at the beginning of the third term."
Student Success has a minimum investment of £50,000. Boyland added that the Student Accommodation fund is available through Friends Provident International's offshore bonds.
The Student Accommodation fund has returned 22.4% over the past three years and 40.1% over the past five years. As well as student accommodation in major university towns and cities, the fund can also invest in accommodation for adult educational courses and for key workers within the National Health Service.
Minimum investment: £50,000
Initial charge: 1.5%
Annual management fee: 1.5%
Student accomodation: Aberdeen, Coventry, Glasgow, Leeds, Leicester, Liverpool, Manchester, Newcastle, Nottingham, Sheffield.
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