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We are considering which of our off-campus properties are surplus to our needs and suitable for sale .
Property purge
Australian universities look to raise capital by selling real estate .
By Wade Zaglas
The University of Sydney is reportedly the latest to “ review its real estate portfolio ,” amid a trend of selling off non-core property in a hot market .
Australia ’ s oldest university is evaluating its options that could result in it selling off 13 properties at least , a decision many Australian universities have had to make in the last 12 months , the Australian Financial Review ( AFR ) reported .
Such decisions have been brought about by a plunging international student market , more online learning and more competition in the online learning sphere .
The new approach is seeing Australian universities flip “ the traditional property script ”, transitioning from “ owners to renters , and holders to developers while increasingly swapping low-rise campuses for high-rise towers of learning ”.
University-owned student accommodation has been hit hard by the pandemic , with the inner-city University of Technology Sydney ( UTS ) selling three of its student accommodation buildings to Scape for $ 95 million . Expressions of interest have also closed at the University of Wollongong , regarding a “ trio of lodging assets ”.
Based on a 72-hectare campus in the inner Sydney suburbs of Camperdown and Darlington , USyd will be downsizing part of its housing portfolio across 12 primarily Victorian terraces , including Arundel Accommodation Triangle and Forest Lodge , to free up capital and prepare for projected changes to student accommodation needs .
“ Four have already been sold , two are currently on the market and six will be put up for sale by the end of the year , including Selle House , a 14-bed older apartment building previously used for student accommodation ,” a University of Sydney spokesperson told AFR .
“ To take advantage of Sydney ’ s current strong real estate market , we are considering which of our off-campus properties are surplus to our needs and suitable for sale ,” they said . The spokesperson called the assessment “ ongoing ”, keeping opportunities open for other “ non-core asset sales ”.
The capital will then be “ recycled through other projects ” such as the redevelopment of 39 terraces at Darlington campus to the tune of $ 40 million . The project has already received State Significant Development Approval and is intended for “ affordable ” student accommodation in the future .
“ Any revenue made from sales of our property will be reinvested into new developments or our Future Fund to support our core teaching and research objectives , and we are only considering buildings that won ’ t be required for our current or future operations ,” the spokesperson added .
Revenue raising through property sales and cost-cutting has been widespread across the sector , with institutions saying that their priority is “ more efficient use of capital ”. One of these institutions is Western Sydney University ( WSU ), which has partnered with fund manager Charter Hall to commit to long-term leases on two high-rise campuses in Parramatta , including its new $ 300 million Engineering Innovation Hub .
WSU also developed and sold a shopping centre , Caddens Corner , for $ 80 million to Holdmark Group in late 2020 , reinvesting the proceeds into teaching and research .
“ Education and capital assets provide an opportunity for the university , investors , the property sector and stakeholders to identify and act on shared opportunities including public-private partnerships and innovative leasing arrangements ,” WSU told AFR .
Victoria University has partnered with super fund ISPT to develop a $ 400 million vertical CBD campus and La Trobe University is looking for a partner to help accelerate the proposed $ 5 billion transformation of its Bundoora campus .
However , based on the activity , professor of accounting at Macquarie Business School James Guthrie still thinks Australian universities are in property development mode .
“ We ’ re not talking millions , we ’ re talking a billion-dollar industry or even more at the moment ,” he said .
“ The amount of property they had and what they ’ re selling – they ’ re only selling off little bits and pieces .”
What to do about non-core university property and capital was discussed at length at an Australian Property Council seminar earlier in the year .
“ Right now , universities are experiencing huge disruptions to their cash flow due to COVID , coupled with significant changes in the demands for on-campus space ,” Nikki Robinson , partner in charge at law firm Clayton Utz ’ s Sydney office , said .
“ They are looking for a fast injection of capital , new or different infrastructure matching the changing demands of the sector and its students , and connections to industry for training , research , development and employment purposes .”
Robinson added that reassessing property portfolios could serve two functions for universities .
“ It can work with universities to develop smarter , more sustainable and more strategically located campuses , and it can provide the capital required to redevelop land no longer needed by universities ,” she said . ■
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