The Canadian investor has just entered the co-living segment and is looking to expand into other operationally-intensive real estate asset classes.
Ivanhoé Cambridge is scouting the market with the aim to enter most alternative real estate asset classes in Europe in the near future. The firm, which manages over €50 bn of assets under management globally, is looking to invest in coliving, student housing, cinema studios, self storage and data centres while aiming to expand in the life sciences sector and to double its exposure to last-mile logistics. Ivanhoé Cambridge entered the last-mile logistics segment last year with the launch of a dedicated strategy with URBZ Capital, an investment and asset management boutique focused on urban logistics facilities in Northern Europe, to which the Canadian investor has already committed €400 mln of capital.
‘While we invest globally in real estate, we are selective and disciplined by focusing on sectors supported by structural trends,’ said Karim Habra, Ivanhoé Cambridge’s head of Europe where the company currently owns a €15 bn portfolio. ‘Alternative real estate asset classes provide scope for growth. We believe they will reach critical size in the coming years and have become one of our key strategies. When they are highly operationally intensive, they offer investors the opportunity to grow twofold, first from the real estate and then from the performance and value of the operations.’
The best route to enter these sectors is by taking a strategic stake in a sector specialist, as it gives a chance to enjoy both the opco and propco returns, Habra added. ‘The first condition however is that we like the collateral, and that market fundamentals are good.’
With co-living being an extension of the residential business, supported by growing demographics and urbanization trends, it was only a matter of time before the company made its first move into the space. As such, in December Ivanhoé Cambridge announced it had become the largest institutional investor in Cohabs, a Brussels-based company specializing in co-living. The acquisition – which represents a major step forward for the institutionalization of the co-living industry – also saw two other institutions enter the capital, Belfius Insurance, and the real estate arm of the Belgian Sovereign Fund SFPIM. Cohabs’ founders and historical shareholders AG Real Estate and Alphastone are reducing their stakes as part of the transaction.
‘We feel like this is the best time to invest in this sector,’ Habra said. ‘We are taking a significant position in a growing company, and most of the capital will be deployed over the next five years as we expand the company’s portfolio. We will also be benefiting from good market conditions going forward, and we expect the returns to be in the opportunistic investment range.’
The co-living market is expected to grow by roughly 20% over the next five years and has already proved to be quite resilient during the pandemic, with the Cohabs portfolio boasting a 97% occupation rate during Covid. ‘The platform this year received roughly 10,000 applications with just 1,000 rooms to fill,’ Habra noted.
Founded in 2016 by four Belgian entrepreneurs — Youri Dauber, François Samyn, Malik Dauber, and Lionel Jadot — Cohabs is a fully integrated co-living platform that both owns and operates its real estate assets. Driven by a community-first approach, it prioritizes the experience of its members through a tech-centric and flexible process and is committed to limiting its impact on the environment by focusing on a sustainable approach. From a social standpoint, Cohabs mostly appeals to students and young professionals and is committed to maintaining 5% of the Belgium portfolio as solidarity bedrooms with 50% reduced rent to ensure co-living is accessible for all.
The 50-person company has a current portfolio of 1.550 bedrooms across five cities (Brussels, Paris, New York, Madrid, and Luxembourg) with the ambition to reach 5,000 bedrooms across 11 cities by the end of 2026, added Habra. ‘The goal is to expand to cities like Berlin, Milan, Rotterdam, Zurich. We believe in this team, and we believe that the growth prospects are strong for this sector. This is a value-creation type of deal, and we are expecting a strong performance from this investment.’
