Mapletree Investments winds down fund as US$1.4 billion student dorm bet sours

[SINGAPORE] Singapore’s Mapletree Investments will liquidate a property fund that once had assets above US$1.4 billion, after its bets on college accommodation in the UK and US suffered years of underperformance.

The Mapletree Global Student Accommodation Private Trust, almost three years after halting regular payments to investors, finally came to an end on March 16, according to documents seen by Bloomberg News. Its net internal rate of return by the end of last year was just 1.1 per cent, well short of its initial target of 12 per cent, the documents show.

The fund – which now has assets of around US$700 million – had asked its investors to give it more time before returning their capital. But at a vote earlier this month its investors rejected the plans. That has pushed the fund into wind-down, meaning it may ultimately need to sell assets at steep losses to give investors their money back.

The documents indicate that investors are likely to get back less than 80 per cent of the capital they committed for the fund’s remaining assets after they are sold, although distributions in the fund’s early years may help soften the blow. Mapletree has warned of further drops in the value of its remaining assets and said “there is no certainty that all assets can be divested promptly and at the targeted price within the one-year timeframe.”

Mapletree declined to comment.

The fund’s poor performance is a rare outlier for an asset class that has seen strong interest and returns in recent years. Singapore sovereign wealth fund GIC and other global investors such as Brookfield Asset Management and Blackstone have piled into student housing, attracted by the promise of regular rental yields.

Mapletree, a subsidiary of Singapore state-owned investor Temasek Holdings, had asked to extend its fund life beyond the end of the decade to redevelop or refurbish some ageing properties including Janet Poole House, a building constructed in 1875 near University College London. It was the second time it had requested an extension.

Mapletree, which managed US$4.1 billion of student housing as of March last year, has long seen the sector as a key focus. Back in 2017, the Mapletree trust invited investors to buy into a “high yielding, recession resilient portfolio,” according to a marketing document.

Many were wealthy individuals, largely drawn from private bank clientele, and the fund raised US$535 million by March 2017. Mapletree itself took a roughly one-third stake.

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The fund originated from an acquisition spree by Mapletree in a push to invest beyond Asia. More purchases grew its book to 35 assets with over 14,000 beds, with a portfolio across UK cities such as Manchester and Birmingham as well as nine US states. That gave it exposure to tenants from top institutions including the University of Oxford, Imperial College London and Purdue University.

The fund initially posted double-digit returns, even though occupancy rates for some properties were low. As early as March 2018, a quarter of its largest asset in North America which boasted 1,308 beds was empty. The 13th & Olive low-rise complex near the University of Oregon also suffered from poor reviews.

The fund often had to overhaul on-site management firms and security at its assets, and introduce initiatives to attract tenants and cut costs. Some ageing properties required costly refurbishment and up-keep. That was before the global pandemic threw up the extra difficulty of limits on international student travel. While the situation improved, the fund’s five-year shelf life was approaching an end.

Publicly listing the fund was considered but ultimately didn’t happen. In the US, the fund received only one bid for its portfolio that would have resulted in negative returns. A shortlisted buyer for its UK assets withdrew its offer.

It convinced investors to approve a three-year extension to avoid divesting at a distressed price, but a delayed exit meant having to accept lower returns. After mid-2023, it stopped its twice-a-year distributions to investors – which have also fallen short – citing high interest rates and a need to preserve cash for future capital expenditure.

Longtime chief executive officer Hiew Yoon Khong said in an annual message in mid-2025 that Mapletree will “cement our position as a student accommodation leader” and is looking to expand its student housing footprint into new markets including Australia and Spain.

He said that Mapletree will launch a second fund comprising of “premium UK student housing assets” with at least £500 million (S$856.9 million) of assets drawn from a £1 billion acquisition in 2024. 

Assets under the Student Castle brand, which was part of the purchase, were meant to seed the fund, but the ageing nature of some has complicated these plans, according to people familiar with the matter. Mapletree is now looking to only inject newer properties into the second fund, the people said, asking for anonymity to speak about private matters.

While some assets have been sold to return capital, Mapletree told holders last month that the climate for selling its remaining properties was still challenging. They could either vote to extend the fund for five years to revamp five London properties at the risk of stumping up more capital, or opt for another three-year extension. After Mapletree abstained, both options were rejected by majorities around 90 per cent.

The student housing sector is one of the most popular segments of the real estate market for global funds. Transactions in the sector amounted to nearly US$23 billion last year, data from MSCI shows, with the US being the most active market with roughly US$10 billion in deals. BLOOMBERG