Property fund manager Cordea Savills has bought a new hall of residence in Bradford for £17m for its Student Hall Fund.
Forster Hall, totals 495 rooms arranged in cluster flats with a shared kitchen and living room.
The property is in a residential area close to the University of Bradford’s main campus.
It is directly let to students on 42-week assured shorthold tenancies and provides an estimated net yield of 6.0%, based on market rental levels.
Alison Puhar, the fund director, said: “The rental growth prospects for student halls generally and the relative security of income have been largely overlooked as an institutional investment.
“We are pursuing a strategy of buying direct lets to complement the seed assets, and Forster Hall is a high quality asset that has extremely good rental growth potential from a relatively low base.
“We expect it to generate rental growth comfortably above average. Our forecast for the student hall sector as a whole is 3.5% pa.”
At its first closing, the fund raised £39m from ten investors who gained exposure to the seed portfolio of three assets, acquired for £64m.
A second closing is planned before the end of the year to tie in with the purchase of further halls.
There is also a substantial pipeline of assets, including sales from universities. It is targeting a return above 10% pa.
References: EGi News 18/09/06
