Canadian pension fund inks €1.5b UK student housing deal

In the latest of a string of major student housing transactions, Canadian pension fund CPPIB has entered the sector with the €1.5 bn acquisition of the Liberty Living platform in the UK.

CPPIB said on Friday that it is buying 100% of the student accommodation portfolio operating under the Liberty Living brand from the Brandeaux Student Accommodation Fund.

As part of the transaction, CPPIB has also acquired the Liberty Living management platform, Liberty Living Management Two, bringing the total investment for the deal to £1.1 bn (€1.5 bn).

Liberty Living is one of the UK's largest student accommodation providers with over 40 residences located in 17 of the largest university towns and cities across the UK. Established in 2000, Liberty Living owns a portfolio of over 16,700 rooms.

Its former owner, the Brandeaux fund, had been seeking to sell the assets through an Initial Public Offering but abandoned the plan last year after failing to raise enough investor interest. In April 2013 the fund was forced to suspend the share price due to insufficient liquidity.

'As a long-term investor, this is an exciting investment for CPPIB and an ideal platform through which we can build further scale, capitalizing on Liberty Living’s position as one of the leading operators in the UK student accommodation sector,' commented Andrea Orlandi, managing director, head of Real Estate Investments Europe at CPPIB. 'This sector is an attractive one for CPPIB and we expect to see continued demand for well-located and well-managed student residences such as those within the Liberty Living portfolio.'

'We look forward to a long-term relationship with CPPIB to grow our market share by continuing to deliver top-quality student accommodations across the UK,' added Charles Marshall, CEO, Liberty Living.

Macquarie Capital acted as sole financial advisor to CPPIB.

Student housing is growing in popularity
At a time of record low yields, institutional investors are increasingly targeting alternative asset classes such as student housing and hotel assets which provide higher returns than the traditional asset classes.

The Liberty Living portfolio deal is the latest in a string of major student accommodation transactions this month. Last week, privately owned investor LetterOne Treasury Services snapped up the Pure Student Living portfolio in central London from alternative asset manager Carlyle for a total of £532 mln (€732 mln).

LetterOne, which was co-founded by Russian oligarchs Mikhail Fridman, German Khan and Alexei Kuzmichev, also exchanged contracts to buy McLaren Property’s Paris Gardens student residence as well as the Union development portfolio for £140 mln.

Similarly, UK investment manager Apache Capital Partners acquired the remaining stake it did not already own in the Paul Street development in Shoreditch. Apache Capital is investing £109 mln in the London project, which is due for completion in July. It will provide 456 bedrooms with communal areas, including a gymnasium and resident cinema.