Recently founded student housing-focused alternative lender Rhize Capital has just made its debut transaction in the Italian market and is looking to build a billion plus platform in Italy over time, according to Steve Grant, Chief Executive at Kinetic Capital, which advises Rhize on investment.
'This is our first deal outside of the UK in what we consider the most attractive market in Europe for lending to the student housing sector,’ Grant told PropertyEU in an interview. ‘We hope to be able to do more deals with our existing borrower as they grow their platform or with new parties active in the market.’
Under the transaction, Rhize has provided a €100 mln three-year loan for two student housing projects in Milan being developed by Proprium Capital Partners and their operating partner, Collegiate AC. The first property, Collegiate Milan North, opened to student residents at the start of 2023 and provides 695 beds across a mix of studios and club rooms. Located in the Precotto district of Milan, the property is a short walk from the University of Milano-Bicocca and is fully occupied for the current academic year.
The second scheme is a development located in the Bovisa district, in close proximity to two campuses of the Politecnico di Milano. The project is due to deliver 470 beds for the start of the 2025/26 academic year.
Grant says Italy had been Rhize’s main investment focus for some time. ‘It is a very attractive market,’ he said. ‘From a lending point of view, there is not much competition from international players and the local banks are only lending on conservative terms. From a student housing perspective, Italy stands where the UK was 25 years ago, with a very limited provision of modern stock and extremely compelling demand.’
Rhize Capital is a partnership between Kinetic Capital, a specialist lender in the purpose-built student accommodation sector and Kayne Anderson Real Estate, the real estate private equity arm of Kayne Anderson Capital Advisors, based in the US. The firm was set up in 2021 as a joint venture with Kayne Anderson with the partners jointly committing up to €1 bn of capital to lend money to the student housing sector across Europe. Kinetic Capital took a minority stake and manages the strategy. Grant, who heads up Kinetic Capital and Rhize, has spent his entire career in the student housing sector, with senior roles at Unite, Urbanest and Global Student Accommodation. Starting in 2001, he helped to establish Purpose Built Student Accommodation (PBSA) as an institutional grade asset class leading the creation of the Unite UK Student Accommodation Fund.
Grant says the company is looking to close more deals in Italy focusing on the largest five or six student cities in the country, including Milan, Bologna, Florence and Rome. ‘We invested a lot of time to understand the market and put a lot of effort into closing this deal, and we would like to do many other deals in this market. We are talking to our borrower and some other prospective partners, with the aim to build a sizable portfolio in the country, with an initial focus on Milan,’ he noted. Despite the high number of students, Milan has one of the lowest provisions of PBSA of any major market in Europe of only 5%, compared to more mature markets where the rate is close to 50%.
Grant: ‘We are looking to enter other European markets as well, such as Ireland and Spain, where we also see a number of good opportunities, although Spain is probably a few years ahead of Italy in terms of market development.’
So far the company has focused on transactions with a development component, and in the future it will be looking to be more active in investment financing as well. ‘The biggest gap is currently in development finance,’ explains Grant. ‘However, we expect refinancing opportunities in the next 12-18 months, and in the future we would ideally have a portfolio split equally between development and investment financings.’
COMPANY PROFILE
Founded in 2020, Kinetic Capital is part of the Dot group, an all-round student housing conglomerate launched by GSA founder Nicholas Porter which combines the $7 bn investment manager GSA, the Yugo brand operating business with 40,000+ beds across the world, the online student market place student.com and lender Kinetic Capital under one umbrella. Two years ago the company set up Rhize to create an alternative lending business dedicated to the student housing sector. Two years ago the company set up Rhize to create an alternative lending business dedicated to the student housing sector. Rhize raised roughly €1 bn of equity from venture partner Kayne Anderson Real Estate, the real estate private equity arm of Kayne Anderson Capital Advisors, based in the United States.
