Redefine grows its presence with quality new digs for students
However, Redefine chief executive Andrew Konig stressed that they still had a long way to go before they considered separately listing the joint venture.
Konig said they would only consider listing Respublica Student Living once it had critical mass, with 10 000-plus beds.
“We are not looking at listing it just yet,” he said.
“Specialisation of asset classes does seem to be a trend that is being well supported by investors at the moment, and this kind of asset class potentially could become its own specialist fund in due course.
“But right now at 6500 beds we don’t think it has the critical mass just yet,” he said.
Redefine has a 53.6percent shareholding in the joint venture.
Konig said they are now expanding their development of student accommodation outside Gauteng.
He said their biggest facility was Hatfield Square in Pretoria, which when completed at the end of this year would have 2 200 beds and be the biggest facility of its kind in South Africa.
Konig said they opened a student accommodation facility in Bloemfontein at the beginning of this year with 469 beds, and a property in Cape Town previously called Shoprite Claremont had been re-developed into a student accommodation facility with 550 beds.
“We are also looking at expanding into Pietermaritzburg with 535 beds,” he said.
Konig said that at 10 000 beds, the joint venture was starting to get to a point of critical mass, but stressed that even if they grew it to 20 000 beds, it would still not be the size of Redefine’s industrial portfolio.
He confirmed that it was a profitable sector, but stressed it was not as profitable as they initially thought.
“The whole fees must fall movement has put pressure on rates in terms of how much you can charge for fair accommodation,” he said.
Konig said they were uncompromising on the quality of the facility that they provided, which was a bit of a niche the joint venture had established.
He added that they could go for a broad spectrum of student accommodation and move down-market and grow the number of beds to 30000, but would rather have an offering in keeping with the Redefine brand, which was a bit above the rest in terms of general quality.
Leon Kok, the financial director at Redefine, said it was difficult to comment on the average rental, because of the various room configurations, but it ranged from R4500 up to R9000 a month, depending on the type of facility.
Kok said the benefit of their strategy was also that they were not reliant on a single rate segment.
“If you are only targeting the top end, middle or government funded or sponsored student you potentially could come up short.
“Typically, all our facilities have the ability to target different rate categories in that if you do experience difficulty to fill them, you can scale down and so on. It’s important to have that ability to have a multi-rate strategy in terms of marketing of a facility,” he said.
Redefine is also moving into the student accommodation market in Australia.
Redefine shares declined 0.76percent on the JSE yesterday to close at R11.69.
- BUSINESS REPORT