Singapore property heavyweight Keppel Corp has purchased a pair of school campuses in Sydney on behalf of its private education fund for a total of A$198 million ($125 million), the company announced late Thursday.
The company said its Keppel Education Asset Fund (KEAF) made its maiden acquisition in Australia with the purchase of a 10,700-square metre (115,174-square foot) campus leased to the University of New South Wales in the suburb of Kensington in a deal with Aussie property firm Charter Hall Group signed in August.
The firm also acquired a seven-storey commercial building in North Sydney’s central business district under a forward purchase deal, which it plans to convert into an independent kindergarten to 12th grade school campus, as it aims to capture growing demand for quality education facilities in Asia Pacific.
“The demand for quality schools and campuses in Asia Pacific continues to be well supported by macrotrends including rapid urbanisation, an expanding middle class and rising affluence, as well as a continued focus on high-quality education,” said Christina Tan, chief executive officer for fund management and chief investment officer at Keppel.
More Assets Lined Up
Backed by institutional investors, including an unnamed major sovereign wealth fund and European financial institutions and pension funds, KEAF invests in education-related assets for elementary, secondary and higher education, as well as in properties serving the research and tertiary education segments in the region.
The fund’s four-asset portfolio, which includes two existing properties in Singapore and Japan, has secured long-term leases with established tenants and yields attractive returns and steady cash flows, Tan said without providing further detail.
Keppel said having the University of New South Wales campus in the portfolio allows KEAF to ride on the recovery of Australia’s tertiary international education sector.
For its second Aussie asset, which is located within the Ward Street Precinct in North Sydney, Keppel said the existing building will undergo extensive renovation to convert it into a K-12 facility spanning 9,150 square metres in net lettable area.
A global operator of premium schools has already pre-committed to a long-term lease on the property and is expected to open a school serving both local and overseas students.
Closing of the deal is expected to happen in 2025, once conditions of the sale are satisfied by the seller, which was identified as local private construction firm Built Group Holdings.
Tan said Keppel has already been upgrading its properties in Singapore and Japan with those efforts having helped boost their asset values by more than 40 percent, while pointing to the potential for acquiring more properties.
“With Keppel’s robust network on the ground, we have developed a strong deal flow pipeline of over US$2 billion in education assets which we are currently exploring,” she added.
As the sponsor for the education-focused fund, Temasek-backed Keppel has so far invested $50 million into the vehicle. At the time of its launch three years ago, Keppel projected KEAF would have $1.2 billion in assets under management (AUM) when fully leveraged and invested.
It closed last year with over S$450 million capital raised, excluding co-investments according to a company representative.
Infrastructure Fund Hits $575M First Close
The pair of Sydney acquisitions bring Keppel’s exposure Down Under to A$4.8 billion across Sydney, Melbourne and Perth with those properties spanning sectors including infrastructure, commercial real estate and data centres.
A day after announcing its Aussie deal, Keppel flexed its fundraising capabilities by announcing at $575 million first closing for its flagship infrastructure vehicle, Keppel Core Infrastructure Fund.
The company’s inaugural, open-ended, infrastructure fund aims to raise up to $2.5 billion to be deployed towards “highly defensive and essential infrastructure assets” across developed markets in Asia Pacific.
“KCIF is primed to benefit from the strong urbanisation trends in the Asia Pacific, which accelerate demand for essential infrastructure in the economic & social, energy transition and digital infrastructure sectors,” Tan said in a separate statement on Friday.
Earlier this month, Keppel expanded its footprint in Asia’s private debt scene with the buyout of private credit specialist Pierfront Capital Fund Management.
The Singapore-based firm is implementing a long-term plan to transform its business structure from a conglomerate into a global fund manager with a goal of growing its AUM to S$200 billion ($146 billion) by 2030.