Transfield Holdings has exited the student accommodation market after a decade, selling out of Campus Living Villages, which owns and manages more than 40,000 beds across 59 properties in Australia, New Zealand, the United Kingdom and the United States.
Guido and Luca Belgiorno-Nettis, executive directors of Transfield, told The Australian that while there were plenty of growth opportunities for the business, they felt it had matured and it was time to focus on new ventures.
But the brothers, two of Australia’s richest businessmen, said they wouldn’t rush back into the property sector because the market was overpriced. Nor will they tender for the infrastructure work created as federal and state government’s moved forward with their asset sales agendas.
“We would have 20 years ago, but there are a lot of people in that field now, we would have to take on a lot of pricing risk to get these projects, and we don’t want to go there,” Luca Belgiorno-Nettis said.
Instead, Transfield would look at sectors around infrastructure, where they could build up a business much like Campus Living Villages. Transfield first came to the Campus Living business in 2004, growing the operation from 360 beds to extend across four countries. “When we went into that business, there weren’t many people talking about the sector,” Luca Belgiorno-Nettis said.
“We were flush with funds after selling the construction business and listing Transfield Services.”
Guido Belgiorno-Nettis said they had looked at demographic changes to find new investment opportunities. “We started thinking of the increasingly ageing population, but found we couldn’t get into that market because it was already heavily occupied. Childcare was the same.”
“It turned out we were co-located with Tuscan (Corporation), and they had a half interest in a 600-bed student accommodation building at the University of Sydney, but they didn’t have the capital or the intellectual depth to take these projects to the next level.”
Tuscan exited the business in 2005, and Transfield purchased the 20,000 bed Century Camps Housing Management portfolio in the US in 2006, before opening Campus Village Living up to institutional investors in 2007.
“This space resonated for us because it could be done as an infrastructure deal, not a property one,” Nicholas James, chief executive of Transfield Holdings, said.
“We had experience with build, operate and transfer arrangements, and that experience in dealing with governments is not unlike dealing with universities, which are like quasi-government entities,” Mr James, who is also a director at Campus Village Living, said.
Mr James said one of the key strengths of Campus Village Living had been its focus on close relationships with universities, allowing them to brand the properties as their own.
The Belgiorno-Nettis brothers also flagged further investment in the energy sector, where they have already taken solar technology company Novatec from start-up to commercial provider.
Guido Belgiorno-Nettis said Novatec had built a demonstration plant in Puerto Errado Murcia in Spain, although that project was later sold. Last year Transfield increased its stake in Novatec, now owning about 85 per cent of the company.