Student housing still core to strategy, Mapletree says after fund wind-down

[SINGAPORE] The student housing sector continues to be core to Mapletree Investments’ strategy, a spokesperson said, despite the winding down of a billion-dollar global fund that held US and UK accommodation assets.

News of the Mapletree Global Student Accommodation Private Trust’s (MGSA) underperformance came to light last week, when it emerged that Mapletree was winding down the fund that, at inception in 2017, had assets of US$1.3 billion.

Its net internal rate of return by the end of last year was just 1.1 per cent, short of its initial target of 12 per cent, according to a Bloomberg report.

The fund, now holding about US$700 million, had sought extra time from investors to return capital. However, a recent vote rejected the proposal, forcing the fund to wind down, which could force Mapletree to sell assets at steep losses to repay investors.

Asked if the closure signalled a retreat from the booming student housing sector, which the group had zeroed in on as one of four core areas, a Mapletree spokesperson said on Friday (Mar 27): “MGSA’s wind-down is due to the fund reaching its end of life, and does not reflect a change of the group’s strategy or direction. Student housing continues to be one of Mapletree’s core sectors.”

In a note issued on Thursday, DBS Group Research head of regional property research Derek Tan wrote that Mapletree’s MGSA portfolio faced a challenging operating backdrop since its inception in 2017.

The portfolio contained older assets that needed refurbishment and had evolving operational needs, and there was also softer occupancy in select US properties. These factors were compounded by pandemic disruptions, higher interest rates and growing capital expenditure requirements.

Mapletree holds a total of almost 26,500 student beds, of which about a third are in the US, where the group has acknowledged there are “policy-driven headwinds”.

Aside from the assets in MGSA which had some 14,000 beds in the US and UK at inception in 2017, Mapletree also owns a 8,192-bed portfolio across 19 cities in the UK and Germany – acquired from Cuscaden Peak in 2024 for £1 billion (S$1.7 billion).

New student housing fund

The group is launching the syndication of a new student housing fund this year – the Mapletree Student Castle Accommodation UK Fund. Seeded with seven student housing properties, and with assets under management of £500 million, the new fund is targeted to close by the end of the year. Mapletree holds some 17,000 beds in the UK.

Tan said the MGSA liquidation reflected “a combination of asset-specific and broader market factors, rather than a structural shift in the student accommodation sector”.

“Institutional appetite for purpose-built student accommodation (PBSA) remains intact, supported by continued capital deployment from global investors such as GIC, Blackstone and Brookfield Asset Management in recent years.”

While there are concerns about possible implications of Mapletree’s fund liquidation to other PBSA players, Tan believes that across the broader market, “fundamentals remain sound, although performance is becoming more differentiated by asset quality, geography and tenant mix”.

He retains his “buy” calls on Singapore-listed players such as (Reit) and CapitaLand Ascott Trust (Clas), with target prices of S$1.30 and S$1.15, respectively.

Centurion Accommodation Reit’s PBSA assets were near full occupancy in the 2025 financial year, reflecting defensive qualities of a largely stabilised, income-producing portfolio.

Meanwhile, Clas offers a still-constructive read, although occupancy for its US-based student housing portfolio eased to 89 per cent and rental growth moderated to 0.9 per cent.

“PBSA is not weakening structurally but normalising, and that performance is turning more discerning. Property attributes that are modern, well-located and well-amenitised will continue to attract demand for students,” said Tan.