Three firms have banded together to create a company with the aim of delivering 5,000 purpose-built student beds in Poland as a first step towards exploiting an under-served market.
Signal Capital Partners, a multi-euro-billion UK-based private asset management firm focusing on European corporate and real estate special situations investments, along with Griffin Capital Partners, the largest privately-owned investment and asset manager in private equity and real estate in CEE, and Echo Investment, the largest Polish development company, are behind the move, subject to anti-monopoly clearance.
The JV is aiming to develop, as a first step, an operating portfolio of 5,000 purpose-built, modern, energy efficient student beds across key academic cities in Poland over the next three to five years, according to the parties.
Ownerships is structured 70% Signal Capital as the majority shareholder and Griffin Capital Partners. The remaining 30% will be held by Echo Investment.
Griffin Capital Partners shall act as the investment and asset manager while Echo Investment will act as the development manager of the venture.
Colman McCarthy, partner, real estate investments at Signal Capital, said he believed the 'dynamically evolving' Polish PBSA (purpose built student accommodation) market presented an attractive opportunity for a well-capitalized investor to create a new platform together with experienced local partners.
He explained: 'The PBSA sector in Poland is an established and growing asset class within the living sector, exhibiting strong income and occupancy performance with a weak correlation to wider macroeconomic performance.'
'Polish PBSA is one of the largest student markets in Europe with over 1.2 mln students, of which over 100,000 are international students – the most rapidly growing group for whom studying in Poland represents a unique value proposition to obtain internationally-recognizable qualifications at a fraction of the cost when compared to their home countries.'
Yet existing public university accommodation often fails to meet students’ expectations, according to the investment professional.
Buildings are often outdated with limited amenities. 'We observe a massive shortage of modern private PBSA, with bed provisions for full-time students in private and modern PBSA amounting to only 1.6%, which is 5-10 times lower than in Western European cities. This sets the stage for rapid growth of our new platform,' said McCarthy.
Griffin says it has a track record of developing and operating assets in the PRS market with around 10,000 secured and over 4,000 operating units, and Life Spot with at least 5,000 targeted and over 1,500 operating unit, as well as in the Polish PBSA.
In 2014, it established Student Depot and subsequently developed, and operated the platform becoming the leading market player with nearly 4,200 beds in operation and another 1,000 beds under construction.
Nebil Senman, co-owner and managing partner, explained: 'Initially, we collaborated with Oaktree Capital Management and later with Kajima Europe until our exit from the Student Depot platform at the end of 2023.'
'We strongly believe in the living sector and are convinced that this sector in Poland has many years of stable growth ahead of it. Now we have the ambition to create, once again, a market-leading platform in Poland, confident that with Signal Capital, we have the right partner sharing our vision to capitalize quickly and consistently on the undersupplied PBSA market. With Echo Investment, we have the best Polish developer to deliver top quality and sustainable brand-new premises in buildings located in vibrant urban centers, offering comprehensive services to meet the student’s needs.'
PBSA in Poland remains an emerging institutional asset class and has been slower to develop than in other European countries. Currently, only approximately 12,700 beds are operated by 9 major providers, which reflects the massive shortage of student accommodations, which is further boosted by the increasing internationalization of Polish universities.
Nicklas Lindberg, CEO at Echo Investment, said the activity of Echo Investment in the living sector continued to expand. Through the acquisition of Archicom, in the Residential-for-Sale segment, Echo became one of the largest residential developers in Poland.
'In Resi4Rent, where we own a 30% stake together with the majority shareholder Pimco and Griffin Capital Partners, we are also one of the market leaders in the PRS segment.'
'We are pleased to announce that, as targeted in Q3 2023, we are now entering the student housing segment as both co-investor and developer, with the ambition to build, together with our partners, a leading and sustainable player in this market.'
'Drawing on the experience gained while growing the Resi4Rent platform, Echo Investment as the development manager will bring to the venture in-house construction and development competences in creating comfortable living spaces.'
'While our goal is to develop a minimum of 5,000 student beds over the next 3 to 5 years, the first ones are expected to be launched in Warsaw and Krakow, with plans for opening in September 2025. The sites have already been secured, and we have identified further opportunities which we are currently analyzing in detail, including locations in other key academic centers such as Wroclaw, Tri-City and Poznan. We will prioritize projects distinguished by their accessibility, top quality, and sustainability, with proximity to universities.'
The finalization of the agreement between the parties is contingent upon obtaining approval from the antitrust authorities.
Linklaters, TSP Law, MDDP and CBRE atre advising Signal Capital Partners and Griffin Capital Partners, while Greenberg Traurig and EY are adivisng Echo Investment.
