Global investors continue to seek diversification with investment in alternative sectors such as student housing

This week QuadReal Property Group acquired an eight-asset, 3,460-bed purpose-built student accommodation (PBSA) portfolio from Apollo-managed funds for over £500m (€580m), representing a fourfold increase to its existing 1,000-bed portfolio in the UK.

Jay Kwan, managing director, Europe, at QuadReal, said: “With resilient demand, structural undersupply, and a large cohort of international students, we have been actively looking to grow our PBSA exposure in the UK and this is an opportunity to expand our student housing platform.” 

Also this week, Franklin Real Estate Advisors bought a 6,200sqm university campus in Toulouse while Goldman Sachs Alternatives and Generation Partners acquired Portswood House, a 435-bedroom PBSA asset in Southampton, for £86m. The two partners first teamed up in January to acquire two PBSA assets in Cardiff and Bournemouth, for a total of £110m.

According to Zubaer Mahboob, SVP in Heitman’s Investment Research, investors are drawn to the potential of strong returns in certain alternative sectors which are still at an early stage of development, and which offer persistent and compelling demand-supply imbalances.

Sectors like student housing, but also senior living and self storage present the opportunity to deploy long-term capital at scale, he adds.

“If we look at student housing for instance, the picture has transformed over the past 20 years, with many more European countries becoming legitimate destinations for higher education,” Manhboob said.

While the US remains an important higher education destination, sharp cuts to research funding and unpredictable visa policies mean that Europe is coming up as a strong alternative, he adds.

“European universities offer a high-quality education which costs only a fraction of the US. An increasing number of foreign students are now coming to Europe and the long-term trendline of students choosing Europe for higher education is expected to continue to grow.” 

In the fund section, Octopus Capital raised £118m for its Affordable Housing Fund and Blackrock attracted €1.2bn of capital commitments for its sixth European value-add fund, EFVI. 

Recently completed deals       
Asset Asset type Location Buyer Vendor Size Price (mln) Key facts
PBSA portfolio living UK Quadreal Apollo 3,460beds £500+ (€580) All the buildings were developed within the last five to seven years to a high specification, and are well amenitised.
50% of Bullring and Grand Central retail Manchester Hammerson CPP Investments 1,825,000sqft £319 (€370) The deal represents a 4% discount to June book value, a blended net initial yield of 6.7%.
100 Regent Street mixed 52,000sqft The Crown Estate Federated Hermes and CPPIB 53,000sqft £95 (€110) The aim of the acquisition is to enhance the office space, “curate” the retail offer and improve the eco credentials of the building.
Manchester Fort retail park retail Manchester PGIM Nuveen 350,000sqft £90 (€104) The asset comprises 40 retail units.
two portfolios mixed France Sagax NA 310,000m2 €94 (SEK 1050) The two portfolios include a total of 46 properties, the majority of which is let to Metro.
Portswood House living Southampton Goldman Sachs and Generation Partners Vita Ventures 435 homes £86 (€100) The two partners joined forces in January to invest in student housing. Generation Partners acts as asset manager and Now Student Living as property manager.
business and trade park mixed Manchester, Kent Chancerygate Yeargate 500,000sqft £75 (€87) The assets are the Birch Business Park in Heywood, Greater Manchester and Spa Trade Park in Tunbridge.
Francis House office 52,000sqft Local government pension fund Derwent London 52,000sqft £55 (€64) The sale price reflects a 4.9% net initial yield.
four-property portfolio mixed UK TPG Angelo Gordon Finsbury Food 672,244sqft £21 (€25) The deal reflects an 8.86% yield.
50.1% of Donkey Hotels portfolio hotel Greece Azora Donkey Hotels shareholders 834 rooms NA Donkey Hotels currently owns four hotels in Athens — Athenaeum Intercontinental Hotel, NEW Hotel, Semiramis Hotel and Periscope Hotel — and the NOUS Santorini Hotel in Santorini.
logistics asset logistics Paris Valor, Quadreal Legendre 10,000m2 NA Part of the multi-tenant property is currently leased to Legendre, a construction, real estate and energy conglomerate, under a nine-year agreement.
88 rue de Rivoli retail Paris Immobilière Dassault NA 6,000m2 NA The acquisition is being financed with an €85m loan.
university campus living Toulouse Franklin Real Asset Advisors NA 6,200m2 NA The property is let under a long term lease.
logistics asset logistics Dublin Pictet Alternative Advisors NA 78,000sqft NA The asset is fully let to Dunnes Stores.
OC Cassovia retail Košice, Slovakia Mitiska REIM NA 22,950m2 NA Mitiska REIM plans to renovate the asset to optimize the layout and unit sizes, and bring in new international tenants.
Project Ebro logistics Zaragoza, Spain Ab Sagax Tristan Capital Partners and Kefren Capital 64,014m2 NA The asset is multi let.

 

Assets on the market       
Asset Asset type Location Vendor Size Price (mln) Broker Key facts
Eschersheimer Landstraße 25-27 office Frankfurt Talanx 11,000m2 €35 NA Law firm MPS is one of the tenants.
Mannheim’s Paradeplatz 1, Hannover’s Ernst-August-Platz 5 and Bonn’s Remigiusstraße 20-24 retail Germany Insolvency firm Torsten Martini NA NA Lührmann Düsseldorf The assets have until August 8 to make an offer.

 

Recently completed loans    
Lender(s) Borrower(s) Asset(s) Loan Size (mln) Key facts
Deutsche Bank Deutsche Finance International and Yoo Capital London Olympia development £1250 (€1444) The five-year loan recapitalises the business from project completion, which is expected in autumn this year, to a proposed stabilisation.
Bond investors Gecina Unsecured €500 The bond has a 10-year maturity and carries an annual coupon of 3.375%.
Pbb GLP Capital Partners two logistics portfolios in the Czech Republic, Poland and Hungary €322 The package is geared towards refinancing existing debt facilities, as well as the development of logistics assets in Poland.
Lloyds Castleforge Clockwise portfolio £180 (€208) The operation brings six separate loans into one facility.
Santander Bank Polska and ING Bank Śląski Heimstaden Resi projects in Warsaw and Krakow €110 Under the terms of the loan, the interest rate will be dependent on sustainability goals.

 

New mandates/JVs and funds on the market   
Firm Fund/mandate/JV Strategy Details
Blackrock EFVI Investing across sectors and across Europe with a value-add strategy. The vehicle has attracted €1.2bn of capital at final closing.
Octopus Capital Affordable Housing Fund Investing in affordable housing in the UK. The fund has raised an additional £118m.

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