1

Student Accommodation: Growing Opportunities

2018 PFA Conference

Tim Peel, CFO

April 2018

1. Global interest

2. The opportunity in Australia

3. What does Scape offer?

4. Impact on Melbourne social infrastructure

Outline

2

3

Source: Savills World Research (2017)

Deal Buyer Buyer nature SellerSeller

nature

Price

(USD)Date Origin

Destinatio

n

Campus Crest

BuyoutHarrison Street Private equity Campus Crest Public $1.9bn Mar 16 US US

InvenTrust

Student

Housing

Portfolio

Scion Group,

CPPIB, GIC

Private equity /

Pension fund /

SWF

InvenTrust Public $1.4bn Jun 16

US /

Canada /

Singapore

US

Oaktree UK

Student

Accommodatio

n

GSA, GICPrivate equity /

SWF

Oaktree

CapitalPublic $900m Sep 16

UAE /

SingaporeUK

Rose Portfolio Brookfield AM Private equity Avenue

Capital Group

Private

equity$580m Mar 16 Canada UK

Union State

PortfolioCPPIB Pension fund Blackstone

Private

equity$580m Apr 17 Canada UK

• Over the past decade, the global

PBSA market has become accepted

as a mainstream investment

category supported by some of the

largest institutional investors in the

world

• Investment in the US, UK and

Western Europe alone reached

historical highs of $16.4 billion in

2016, with strong momentum from

growing fundamentals

• Deal flows are large driven by global

institutional search for scale and

operating, income producing

assets in a low yield environment

- 37% of investment was cross

border in 2016

Largest PBSA transactions 2016/17

Global student accommodation investment activity (2007-2016)

Source: Savills World Research (2017)

Global Purpose Built Student Accommodation (PBSA) sector… not an alternative asset class

4

Most active global investors in student housing (2016/2017 rankings)

Source: Savills World Research (2017), company websites

Rank Investor Type OriginTotal AUM

(US$)

1 GIC Sovereign Wealth Fund Singapore $100 bn

2 CPP Investment Board Pension Fund Canada $337 bn

3 Mapletree Investments Investor Singapore $30 bn

4 Scion Group Owner / Operator US $5 bn

5 GSA Group Developer / Owner / Operator UAE $8 bn

Global Investors Australian Investors

Global Purpose Built Student Accommodation (PBSA)Strongly supported by institutional investors

Australia compared to the rest of the worldAustralia enjoys an exceptional share of international students and benefits from proximity to Asia

5

Top outbound markets and destinations

Source: Savills World Research (2016)

Country RankTop 100

Universities

United States 1 41

United Kingdom 2 12

Australia 3 6

Germany 4 10

Canada 5 4

24%16% 15% 12% 11%

6% 6%

0%

25%

50%

75%

100%

UK Netherlands France USA Germany Australia Spain

Beds / total enrolled studentsBeds / total enrolled students

Source: Savills World Research (2016)

Source: Times Higher Education world university rankings (2017)

• Australia enjoys the third largest number of

international students globally (behind the US

and UK) and is a preferred educational

destination for Chinese, Indian and South

Korean students

• Historical underinvestment in PBSA has led to

a continued shortage of beds for students in

Australia compared to its global peers

Inbound international student rankings

Australia as an international student destination

Record number of international students choose Australian institutions for a world-class tertiary education

Australia benefits from its proximity to fast-growing Asian countries

High living standards and a quality degree in Australia are major drawcards for international students

Education is Australia’s largest services export and 3rd largest export behind iron ore and coal

Scape’s key target markets in Australia remain significantly undersupplied

Securing prime PBSA locations and providing students with a premium offering will allow for ongoing rental

growth

Ongoing institutionalisation of the PBSA and the broader built-to-rent sector 6

A globally relevant market with strong fundamentals

Education is a mega trend sector with strong demand fundamentalsRecord number of international students choose Australian institutions for a world-class tertiary education

7

~9% CAGR in total international

student enrolments since 1994

Note: Decline in enrolment observed during 2010 to 2012 primarily related to a short-term decline in Vocational Education enrolments – affected by (1) uncertainties in relation to Federal

Government’s Skilled Occupation List (which was under review in 2009/2010); selected vocational education colleges under investigation / shutting-down (abuse of student visa system);

(3) AUD appreciating to US$1.10 (note, in contrast, demand for Higher Education remained resilient)

World-class Australian universities and student cities High living standards and a quality degree are major drawcards for international students

Source: QS (2018), news websites

QS World University Rankings (2018) Ranking

Australian National University 20

University of Melbourne 41

University of New South Wales 45

University of Queensland 47

University of Sydney 50

Monash University 60

University of Western Australia 93

QS Best Student Cities (2017) Ranking

Melbourne 5

Sydney 13

Brisbane 20

Canberra 22

Adelaide 44

Perth 50

5 Australian

universities

featured in

QS Top 50

world

rankings in

2018

Australia is

home to 6 of

the top QS

Best Student

Cities in the

world in 2017

“Overall satisfaction had climbed two percentage points since the survey

began…other main scores had also increased steadily since 2010, with

90 per cent satisfied with their living experiences and 88 per cent

with their study experiences — up six and four percentage points

respectively…”

The Australian, 26 October 2016

“The number of international students coming to Australia surged to

record levels last year and there are hopes the political instability

unleashed by Donald Trump and Brexit will help lure even more

foreign students to the country…”

Sydney Morning Herald, 22 February 2017

“Almost three quarters (74%) of the 65,696 respondents said Australia

was their first choice destination for overseas study…reputation of

Australian qualifications was the top factor when deciding to study in

the country, true for 95% of respondents…reputation of the education

system was a close second with 94%, while 93% of respondents cited

personal safety and security as a factor for choosing Australia.”

Professionals in International Education News, 22 February 2017

8

3,781 4,358 5,821 6,734 7,746 8,631 9,015 10,40912,808

16,44719,090 19,252 18,223 17,235 17,928

20,43123,294

26,293

32,163

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2016 2017

Education continues to be key to the Australian economyAustralia’s largest services export; 3rd largest export behind iron ore and coal

Source: Department of Foreign Affairs & Trade; ABS

Growth in Australia’s international education sector (A$m)

Contribution to Australian economy: A$32.2 billion

(2017)

63,14757,124

32,16325,612 24,223

Iron ore Coal Education LNG Other Travel

Top 5 Australian exports overall – 2017 (A$m)

Source: ABS 2018

#332,163

24,223

10,1997,589

4,264

Education Other Travel BusinessServices

Transport FinancialServices

Top 5 Australian services exports (A$m)

Source: ABS 2018

#1

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10-year CAGR: ~9.6%

• $32.2bn reflects student spending on tuition,

accommodation, living expenses and domestic

travel during their studies

• Deloitte further estimates an extra A$1bn in

spending – from short-term language studies

and visiting friends / relatives of international

students

“International education is Australia’s third-largest export earner, contributing many more than 130,000 jobs here in Australia…76% of our international

students chose Australia as their first preference destination, compared to 71% in 2014 or 70% in 2012. So, a pleasing indication that as the number of

students have grown, so too has the fact that Australia has been their first choice destination…” – Simon Birmingham (Australian Minister for

Education and Training)

5%

11% 12%14%

31%34%

39%42%

54%

63%65%

68% 68%

Perth Melbourne Sydney Brisbane Canberra London Bristol Edinburgh Manchester Cambridge Oxford Durham Liverpool

Significant PBSA supply gap across Australia’s key education marketsAustralia remains significantly undersupplied

Source: Savills Market Report – Australia Student Accommodation (2016)

PBSA supply (current & pipeline) as a % of total students by city – key target Australian markets vs the UK

Australia PBSA penetration levels

remain significantly low compared

to the mature UK market

UK PBSA market

(Scape’s London / Bristol portfolio is 100% occupied)

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11

Source: The Times Higher Education World University Rankings 2018, university websites

Note: Figures reflect 2018 academic year tuition fees (US$) and are predominantly for business degrees. Australian tuition fees converted to USD at 0.75 USD/AUD, UK

tuition fees converted to USD at 1.38 USD/GBP

Affordable tuition costs in AustraliaTuition fees for top Australian universities are affordable compared to global counterparts

Tuition fees per annum for top 8 universities for Australia / USA / United Kingdom (The Times Ra

nkings - 2018)

$27,975

$40,000

$25,944

$30,960

$49,330

$40,319

Australia

USA

UK $26,00

0

$40,00

0

$40,00

0

$49,00

0

$28,00

0

$31,00

0

A brief history of PBSA in AustraliaEntry into market driven by strong supply-demand fundamentals

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PBSA in Australia – Market entry

1997 2006 2008 20132011 2016

• The Pad

established

• Scape Founders’

majority share later

purchased by Blue

Sky and Goldman

Sachs and

rebranded to Atira

• Opened first private

PBSA operations in

Sydney, Melbourne,

and Brisbane

• Property manager

only at this point

• Created by

Plenary Group

with first asset

built in Sydney

(~100 beds,

completed 2013)

• Entered Australia

with acquisition of

350 bed site in

Parkville,

Melbourne

• Entered Australia

with ~700 bed

development in

Southbank

(Brisbane)

20172002

• Transitioned from

managing general

accommodation to

developing PBSA

• Launched first

development

(~ 700 beds) in

Brisbane

• JSE-listed Redefine

Group chooses

Melbourne for first

asset

Source: Scape, publicly available information

• Scape Australia established in 2013

• JV1 equity commitments grown from

A$220m (2014) to A$615m (2017)

• Secured commitment from Allianz in Apr

2018

• ~5,500 PBSA beds under development

across 10 projects a significant PBSA

pipeline across Australia

76,000

82,50087,000

97,000

105,000

119,000

131,000135,000

$530m

$87m

$557m

$475m

$0m

$200m

$400m

$600m

$800m

$1,000m

$1,200m

$1,400m

$1,600m

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

2014 2015 2016 2017* 2018 2019 2020 2021

Number of Beds [LHS] Value of Transactions [RHS]

A brief history of PBSA in AustraliaEntry into market driven by strong supply-demand fundamentals

13Source: Scape, Savills (PBSA) Market Report 2017, publicly available information

PBSA in Australia – Historical and forecast PBSA supply

* Year to September

International yield comparisonAustralian PBSA yields expected to reach 5.50% by 2020

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• The Australian PBSA sector is classified as being in its

development phase

• Relative to core property sector yields, Australian

PBSA has offered attractive return premiums

throughout the early stages of the emerging sector

• Transactions of operational PBSA to date are limited, a

trend is emerging showing the sharpening of yields

to be more in line with core sector yields (expected

to reach 5.50% by 2020), similar to international

markets

• Transactional volumes of stabilised PBSA assets is

expected to increase over the next ~3 years as

assets complete construction, commence operations

and stabilise occupancy

4.0%

5.0%

6.0%

7.0%

8.0%

Source: JLL

(2017)

International yield comparison (current)

Historical and forecast PBSA cap rates –

Australia

Source: JLL

(2017)

6,634

5,501

3,854

3,3663,125 3,113

2,585 2,500

1,304

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

Urbanest Scape Atira Iglu Wee Hur(UniLodgemanaged)

Student HousingAustralia

GSA (StudentHousing Co.)

Student One Redefine (Journal)

Scape is the 2nd largest owner & operator of direct-let, off-campus

PBSAScape is a leading PBSA owner and operator in the Australian PBSA market

Source: Scape, Savills (PBSA) Market Report 2017, publicly available information

Notes: Significant majority of UniLodge assets (~12,000 beds in total) are not purpose-built, only purpose-managed (typically comprises an existing residential building leased out to students

and managed by a student accommodation operator) – excluded in this chart. CLV assets are on-campus and not purpose-built –excluded in this chart.

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Strong alignment of interest (significant Founder ownership interest in operator and direct ownership in underlying

real estate)

• Washington State

Investment Board

• APG

• Bouwinvest

• ICBCI

• Allianz

• Goldman Sachs /

Blue Sky• GIC

• Wee Hur

• Listed on SGX• N/A • N/A • Valparaiso

• Redefine

• Listed on JSE

Scape

Founders own

90% of the

operator

Investors

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Scape Brand Video

https://www.dropbox.com/sh/s8foilxakesf78e/AACmFm1xJw3mZIXZ3FEedUd8a?dl=0

1717

Scape is changing the shape of

student

accommodation in three big ways…

…to shelter & shape the minds of

tomorrow

Scape are offering students a holistic, curated series of events which will ensure they are engaged socially, motivated in their studies

and inspired for life after uni. Understanding the student psyche and anticipating their needs has allowed us to create a solution broken

down into 3 main areas. These are the foundations allowing us to provide students an experience which will be unique to living at a

Scape building.

In each of these areas, we are celebrating our buildings as the hero: Scape South Bank, Scape Swanston and Scape Abercrombie

are galleries in their own right – bringing the Scene, Balance and Horizons into our students homes.

Scape’s PBSA is superior to all other student accommodation optionsScape’s PBSA product is the most attractive accommodation solution for students (international and domestic)

Services & amenities HomestayResidential

units

On-campus

options

Non-Scape

PBSA

Scape

PBSA

Prime location within walking distance to university ?

Convenient access to public transport links ? ?

Institutional ownership (safe landlord)

Premium / best-in-class design

Purpose-built living / communal spaces for students

Online booking journey (paperless / accepts foreign

currency)

All-inclusive base rent

In-house operational / cleaning team (all Scape

employees)

Pastoral care (student resident advisor)

24 / 7 concierge and security

Industry networks (start-up ecoystem / WeWork

connectivity)

Exclusive retail discounts

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International students will increasingly gravitate towards purpose-built student accommodation solutions as

the Australian market continues to mature (in line with overseas PBSA markets)

Branded vs White Label operators

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Strong management will be key to success

• Having innovative spaces and modern

facilities that are specifically designed

for students is the key difference

between different operators in the

Australian and international market

• As the sector attracts more investment,

strong management and

differentiated products will begin to

segment the market

• Ensuring students not only have a

suitable alternative to standard rentals,

but a good experience is critical for

sustainable institutional investment in the

sectorScape Southbank Scape Abercrombie

Scape Swanston

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Scape Swanston – site photos

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Scape Swanston – student events

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Scape South Bank – site photos

Scape South Bank – student events

112,029

77,760

64,807

39,428 37,742

24,174

Melbourne Sydney Brisbane Perth Adelaide Canberra

Melbourne CBD hosts the highest number of total students across

AustraliaMelbourne CBD is the leading city in Australia for tertiary education

Source: Savills Market Report – Australia Student Accommodation (2016), Melbourne City Council –“A Great Place to Study: International Student Strategy 2013-2017” (jobs created),

University of Melbourne International Student website (average spend)

No. 1 in total full-time student numbers across key Australian gateway cities (CBD only)

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Melbourne

CBD is #1 in

Australia

(total full-time

students)

International students contribute

significantly to Melbourne and Victoria

~40,000full-time

jobs

created

(Victoria)

~$65,000average

spend /

year

studying in

Melbourne

University of

Melbourne, Main

Campus

University of

Melbourne,

Economics Building

University of

Melbourne, Business

School

University of

Melbourne, Law

School

RMIT City Campus.

RMIT, Business

School & Sports

Centre

RMIT, Architecture &

Design School

RMIT, Design School

30

1

2

6

6

5

5

4

43

3

2

9

8

87

7

10

11

10

C

S

F

F

S

C

Melbourne Central

Shopping Centre &

Train Station

State Library of

Victoria

QV Shopping

Centre

Scape Swanston

Scape Carlton

Scape Franklin

911

1

Example: Central location of Scape’s Melbourne assets – All will add to core CBD infrastructure (including co-living, co-working and retail)

200m

http://www.infrastructurevictori

a.com.au/sites/default/files/file

%20a%20spatial%20perspect

Scape’s asset portfolio is a significant contributor to Melbourne CBDMelbourne CBD is deserving of the highest-quality PBSA solutions to be delivered by Scape

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Melbourne is Australia’s leading city for world-class education and domestic / international students

Scape’s world-class building designs are a key contributor to Melbourne’s iconic cityscape / skyline

Trophy assets provide best-in-class living and learning solutions to domestic / international students in Melbourne

Significant employment opportunities (~40,000 jobs) generated during building construction and ongoing building management upon completion

Premium mixed-use buildings delivering signature student communal areas encouraging innovation and collaboration

Existing global partnership with WeWork – giving our students unique start-up employment opportunities

Singular ownership of all Scape buildings (not strata) with premium rooms built entirely for rent (not for sale)

Increasing residential housing / rental availability (for non-student population) and improving affordability for the broader rental market in Melbourne

CBD

The future of PBSAStrong fundamentals to drive yield compression

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Continued institutional involvement will increase capital flows into PBSA in Australia and

globally

Likely institutionalisation – not forever an alternative sector in Australia

Quality operators with a differentiated offering will succeed

Winners will offer strong management and differentiated products (including Co-Living)

Yield compression will occur as the market matures

PBSA will continue to add to core CBD infrastructure

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Thank you