Goldman, Wellcome Trust and Greystar form €2.6b UK student JV

US investment bank Goldman Sachs has joined forces with the British charitable foundation Wellcome Trust in a £2 bn (€2.6 bn) student accommodation joint venture.

The alliance combines iQ, owned by the Wellcome Trust, with Prodigy Living, owned by Goldman Sachs in tandem with Greystar, a US real estate investor.Goldman will own 68.4% of the new venture, Wellcome 28% and Greystar 3.6%.

Vero Group will initially hold a portfolio of 23,500 beds in 25 towns across the UK, just over half the number owned by the country's largest student housing operator, Unite.

Richard Spencer, managing director at Goldman Sachs, said: 'We are committed to building the UK’s leading student accommodation provider. We look forward to working with our partners and Vero Group’s management team to grow the company and to provide compelling financial returns for shareholders and excellent career trajectories for Vero Group employees.'

Goldman and Greystar bought their first joint student accommodation assets in 2013 and became one of the sector’s largest players with the purchase of a £500 mln portfolio from Knightsbridge Student Housing in May 2015.

Investors are increasingly drawn to student housing because of the higher returns offered by the sector. Last month, US private equity firm Harrison Street Real Estate Capital formed a joint venture with Irish developer GSA to invest €250 mln in student homes in Dublin over the next five years.

The operation marked Chicago-based Harrison's entry into the European market following the launch of its maiden European student housing opportunity fund, which raised €135 mln in equity capital last June.