Far East Orchard has launched its first private fund in Singapore, the FE UK Student Accommodation Development Fund (FESAD). The Mainboard-listed company also announced the first close of GBP70 million ($120.13 million), along with the fund’s target aggregate commitment of GBP100 million.
According to an Aug 22 announcement, FESAD will invest in Purpose-Built Student Accommodation (PBSA) development opportunities within the UK.
The fund is currently seeded with a development site in Glasgow, Scotland, which was acquired in March, where a 273-bed student accommodation project will be constructed. The fund will target “high-potential” PBSA development projects in the UK, says Far East Orchard O10 O10.
Far East Orchard’s wholly-owned subsidiary, Far East Orchard Investments (UK) Pte Ltd, has committed GBP35 million of the GBP70 million committed by limited partners.
Far East Orchard says there is high demand for both university places and student accommodation in the UK. Citing CBRE data, Far East Orchard says there is a current shortfall of 580,000 beds in the UK.
According to Far East Orchard’s results for 1HFY2024 ended June 30, reservations for its UK PBSA portfolio for the academic year commencing September stood at around 92%.
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The launch of the fund follows Far East Orchard’s acquisition of a 49% stake in Homes For Students, the UK’s largest independent PBSA operator, announced in April.
Alan Tang, group CEO of Far East Orchard, says: “Having been in the UK PBSA business since 2015, we have established a track record in the market and remain confident in the sector given its strong fundamentals, robust student demand, and structural supply-demand gap.”
Tang adds: “Moving into the fee-based investment management business is a natural progression in addition to our current operating fee-based model to leverage our investment and asset management capabilities in the PBSA business in the UK.”
Shares in Far East Orchard closed at 0.5 cents lower, or down 0.5%, at 9.95 cents on Aug 22.
