From Greystar to GSA, a Who’s Who of Investors in Spain’s Market for Student Residences

27 August 2018

With returns of 5.5%, the student housing market has become the new El Dorado of the real estate market. A long list of foreign funds are beginning to invest in this sector in Spain, and the supply of accommodations is expected to rise by almost 10% up to 2019.

Anglo-Saxon funds and operators dominate the wave of foreign capital that is taking on the market for student residences, one that offers returns of 5.5% in Spain. Just in 2017, investments grew from 50 million to 600 million euros.

The supply of assets in this alternative market has increased by 3.5% since 2015, boasting 93,563 beds in the market at the close of last year. Forecasts expect the sector to grow by another 1.5% this year and up to 7.7% at the end of 2019, according to data from the consultancy JLL. Which are the funds that dominate the sector? And who set to join this latest rush for gold?

The high point of the new wave of international investment in Spain’s resis (student residences) was reached at the end of 2017. Until December, Resa was considered the king of the residential market for university students in the country. It was owned by for years by the firm Lazora (Azora) until the arrival of the joint venture formed by AXA Real Assets and CBRE Global Investment Partners funds, which made an offer for roughly 500 million euros. Subsequently, the company’s 37 assets, distributed among 33 buildings and four undeveloped plots of land, were taken over by the specialised operator Greystar, partner of AXA Real Assets and CBRE GI.

Greystar’s place at the top of the list remains firm, but a long list of other players are vying to take the top spot. The British operators GSA and Collegiate, and the Luxembourg fund manager Corestate all have ambitious plans for growth in Spain.

GSA will invest 300 million euros in new acquisitions in the Spanish market, as reported by EjePrime. The international student-accommodation giant expects to be managing 10,000 beds in Spain within five years’ time. For now, the company has two projects underway in Barcelona, ​​in a total investment of thirty million euros, and is already working on plans to enter the market in Madrid, as well as exploring other cities such as Salamanca along with regional capitals in the south and north of the country.

For its part, Collegiate allied itself with the Spanish group Early Capital at the beginning of the year to enter Barcelona. The operator will manage the student residences at the Finestrelles complex, in Esplugues de Llobregat, acquired by Early last autumn, its third asset after the ones it already owns in Madrid and Valencia. Now, the company is looking for opportunities in Bilbao, Malaga and Granada.

Corestate also flew in from Luxembourg. Like the more than 473,000 university students who arrive every year in the country, searching for accommodation, the fund is looking to enrol in the sector. After beginning work on its first two projects, in Madrid (inauguration in September) and Seville, it is now finalising the purchase of a plot of land on which it is to develop another 400 beds. The manager’s goal is to become one of the top three players in the sector by 2020, with more than a thousand beds spread across the country. The company is already analysing the acquisition of another half a dozen plots of land to attain the goal it set for itself.

The Student Hotel is another of the major European players that have begun to take a close look at Spain. The Dutch operator has announced plans to invest 240 million euros in Spain and has already acquired two assets in Barcelona and will debut its first project in Madrid in 2019.

The Spanish ‘resi’ listed on the MAB

Although much of the capital that is being allocated to the student residence market in Spain comes from abroad, the local players are also looking for their piece of the pie. The Lofttown and Syllabus, a specialised vehicle created by Urbania International, are two clear examples of emerging, local interest in the sector.

Lofttown started its journey in the picturesque neighbourhood of Gràcia in Barcelona. Presided over by Santiago de Cruilles, the company already has two more projects in the Catalan capital in which it invested 24 million euros, EjePrime reported. The company is also analysing a possible debut in other cities around the country, such as Madrid, Girona and Valencia.

For its part, Syllabus is already currently one of the most active investors in the student residence market. Created last April by Urbania, the vehicle expects to invest up to 200 million euros in the development of new student residences in Spain. The company hired the former CEO of Hill International, Jeffrey Sújar, and has already made its first acquisitions, in Valencia and Malaga.

In addition, the university market in Spain is undergoing such a boom that a company that focuses on the market is also listed on the local stock exchange. Student Properties debuted on the Mercado Alternativo Bursátil (MAB) last December. Currently, the company owns a single asset, located in the district of Salamanca in Madrid.

Other possible arrivals

During this year and, above all, the one that is coming, new players are expected to enter the market for university residences. On such arrival is the American giant CA Ventures, which has Spain squarely in its sights within a 500-million-euro European investment plan.

Other institutional investors that are interested in the market include the Belgian group Life, the American investment fund Round Hill and the British operator Amro. The latter is looking for a partner in the national market to invest up to €300 million to create a portfolio of 5,000 beds in southern Europe.

Original Story: EjePrime – Jabier Izquierdo

Translation: Richard Turner


Round Hill: A New Player in Spain’s Student Hall Market

19 July 2018 – Eje Prime

A new player wants to benefit from the boom in student residences in Spain. The British fund Round Hill has set its sights on the domestic market and is joining the long list of investment firms that are looking for opportunities in these types of assets in the country, according to explanations from sources close to the company speaking to Eje Prime.

The fund currently has a pipeline of more than 7,000 beds in the student hall market in several countries across Europe. Spain and Portugal feature on the list, as do the United Kingdom, Ireland, The Netherlands and Portugal.

Round Hill, founded in 2002 by Michael Bickford, a former director of Morgan Stanley, is sounding out the market to find both land and student residence assets through which to compete in a sector that is clearly booming around the world and, above all, in Spain, the country the receives the most Erasmus students.

The company even has strategic alliances with other investment funds for specific projects. In this way, in the Netherlands, Round Hill and KKR have created a joint venture to purchase a three-acre plot in Utrecht, in partnership with Stadium Capital Partners, on which they are going to build a 23-storey building with 577 beds. In addition, the tower will contain 173 apartments for young professionals.

The joint venture between Round Hill and KKR may also make its debut in Spain, according to sources at the company. “We hope to expand our footprint in student housing and residential accommodation in certain key markets in Europe”, they say.

In addition, Round Hill has been interested in the Spanish hall of residence market for several years now. One example is that the fund was one of the parties interested in buying the Resa asset portfolio, which ended up in the hands of AXA Real Assets and CBRE Global Investment Partners for around €500 million.

Luxury developers of Palo Alto

Round Hill Capital already has a star project in Spain. Palo Alto, located in Ojén, a town adjacent to Marbella, comprises 600 homes spread over a plot measuring fifty hectares, including twenty hectares of green space. A luxury urbanisation in which the real estate fund invested €250 million in 2016.

Moreover, following its arrival in the Spanish market, the company led by Bickford explained that it had another €1.5 billion to invest in real estate. One of the closest directors to the founder of Round Hill is a Spaniard, who played a key role in the development of Palo Alto. Matías Villarroal, formerly of JP Morgan and Morgan Stanley in New York, is the Director General and Head of Residential Developments at Round Hill in the Spanish market (…).

Original story: Eje Prime (by J. Izquierdo & P. Riaño)

Translation: Carmel Drake

BNP Paribas: Spain’s Hall of Residence Market Will Grow by 4% in 2019

16 July 2018 – Eje Prime

(…). With 1,148 accommodation centres for university students located all over the country, split between halls of residences (963) and residential colleges (185), the domestic market comprised 93,500 beds at the end of 2017. Nevertheless, that supply “is small compared with current demand”, explains BNP Paribas Real Estate in a report to which Eje Prime has had access. For this reason, the international consultancy firm forecasts that this alternative market will grow by 4% in Spain in 2019.

In recent years, the sub-sector has recorded some major operations involving the sale of both assets and companies. The most important deal came at the end of 2017, when AXA Real Assets and CBRE Global Investment Partners invested almost €400 million in the purchase of the entire portfolio of Resa, the vehicle specialising in student halls previously owned by Lazora. Following the operation, the manager Greystar became the king of the halls in Spain with 37 assets under ownership (four of which were being developed). In total, more than 9,000 beds changed hands.

Resa’s sale is nothing more than a consequence of the current investor appetite, primarily from international funds, many of which specialise in this sector. In 2017 alone, fourteen student halls opened their doors, adding 2,149 new beds to the sector. Moreover, since this is a very fragmented market with many owners, we are seeing the purchase of large bundles of beds, which the new players arriving in Spain are using to initiate their expansion plans.

Such is the case of Corestate, an investment fund headquartered in Luxembourg, which purchased a former residence, containing 260 rooms and 302 beds, in Madrid in 2016 to renovate the building and give it its personal stamp. With support from Villar Mir, the company disbursed €40 million on that project. A year earlier, the Dutch company The Student Hotel paid the same amount for two halls of residence in Barcelona (Melon District Marina and Melon District Poblesec) containing 600 rooms in total.

Those operations led by international funds show the influence that foreign capital has and, above all, is going to have, in the student hall sector. A large part of this interest in the domestic market stems from Erasmus. Spain is the most sought-after country by university students, ahead of Germany, the United Kingdom and France. Two years ago, 45,813 young people arrived in the country, including Erasmus and international students on secondments, and all of them needed to find a bed for the year.

Geographical dispersion

Another one of the major attractions of the student hall market in Spain is its geographical dispersion. It is not only Madrid and Barcelona that are attractive: Málaga, Valencia, Sevilla, Salamanca and Granada are all cities with a large influx of students, many of them international, arriving every year.

Madrid is the city with the largest supply of rooms for students, with 21,159 beds in 198 centres at the end of 2017. That figure accounts for 23% of the total stock on the market in Spain (…). Cataluña was ranked in second place (…) with 170 centres and 14,177 beds, accounting for 14% of the stock. It was followed by Castilla y León (where Salamanca plays an important role) and Andalucía, with shares of 14% and 12%, respectively (…).

Activity is spreading to the north too. Just last week, the fund WP Carey paid €10 million to buy an office building in San Sebastián from Solvia, which it is going to convert into a hall of residence for students (…).

Original story: Eje Prime (by Jabier Izquierdo)

Translation: Carmel Drake

Corestate Finalises More Land Purchases in Spain

25 June 2018 – Eje Prime

Corestate wants its share of the student resident cake in Spain. The Luxembourg-based fund manager is finalising the purchase of new plots of land in the country, at the same time as it is starting to search for new opportunities in Portugal, according to explanations provided by the company’s most senior executive in Spain, Christopher Hütwohl. Corestate’s objective is to be ranked as one of the Top 3 operators in the sector by 2020.

The group is whereby seeking to fight off competition from companies such as Greystar, currently number one in the sector by number of beds following its acquisition together with Axa Real Assets and CBRE Global Investment Partners of Resa’s portfolio (formed by 37 assets) for €500 million. Another prominent operator is GSA, which acquired RIO’s portfolio for €180 million.

Corestate, which managed assets worth €22 billion at the end of the first quarter, is now launching new land acquisitions to build halls of residence for students, which will be added to the 206 beds that it is going to open in the Madrilenian district of Moncloa in September and the more than 300 that it will incorporate in Sevilla following the purchase of a plot of land in May.

According to Hütwohl, the company is currently finalising the acquisition of another plot on which it will build 400 beds and is “analysing four more plots” for 700 beds. Thus, Corestate’s plans include closing 2018 with more than 200 beds in Madrid and reaching 1,000 beds by 2020, which, according to Hütwohl “would place us as one off the Top three players in Spain”.

In parallel, the company has started to analyse its entry into Portugal with its business model. According to the head of Corestate, the fund is looking for opportunities in cities such as Lisbon, Porto and Aveiro.

The company is looking for plots on which to build with sizes that depend on the sizes of the halls of residence that they want to build, provided they are located in university cities. Nevertheless, Hütwohl warns that the “minimum size to achieve efficient management is 200 beds”.

“The student residence sector is becoming increasingly more competitive in Spain and we do not want to miss out on the opportunity and the advantage that our international knowledge affords us”, says the group’s executive in Spain (…).

Original story: Eje Prime (by P. Riaño)

Translation: Carmel Drake

Everis & AXA Sign The Largest Office Rental in Madrid Since 2013

17 May 2018 – Eje Prime

Everis and AXA have signed the largest office rental contract in Madrid since 2013. AXA’s real estate manager is going to lease almost all of Edificio Novus, located in the north of the Spanish capital, to the consultancy firm, which will occupy 37,800 m2, according to a statement issued by the insurance group.

Located close to Barajas airport, the building has six floors and spans a total surface area of 42,000 m2. It is also home to Hilti, the company that supplies technology to the construction sector. Everis is going to employ up to 4,000 people on the site, whereby centralising its workers in the capital into one building.

The asset has been owned by AXA Real Assets since 2015. Over the last three years, that group has renovated the common areas and has promoted the name Novus, the building’s new brand name since it passed into the hands of the multinational.

In addition to this contract, Everis already closed a rental contract with GMP for more than 5,000 m2 of space in the building at number 77 Paseo de la Castellana. A priori, the headquarters of the consultancy in Spain will be located there, with offices for directors and the most corporate areas of the company (…).

Original story: Eje Prime

Translation: Carmel Drake

Spain’s Student Halls are the Most Profitable in Europe with Yields of 5.5%

14 May 2018 – Eje Prime

As well as being the largest recipient of Erasmus students, Spain is now also one of the most attractive countries for funds and operators specialising in halls of residence. The high demand and shortage of existing supply multiplied the investment in this alternative market ten-fold in 2017, increasing from just over €50 million to €600 million in one year. One of the keys to this growth lies in the profitability of the segment: with a yield (…) of 5.5%, Spain offers the best returns on the whole continent, for nations with more than 1 million students, according to a report from the consultancy firm Cushman&Wakefield.

In this hall of residence boom, which has allowed investments in the segment to grow by 29% across Europe, Spain also led the ranking of the largest operations in 2017. The transaction involving Resa’s portfolio, which was sold by Azora to the funds Axa Real Assets and CBRE GI for €400 million was the largest deal closed on the whole continent last year. Moreover, Operation Rio, which involved the sale of Oaktree’s Spanish portfolio to GSA for €180 million, also ranked in the top 3, a podium that was completed by another deal involving GSA, in that case together with GIC, which acquired thousands of beds from LJ Capital in Germany for €250 million.

The increase in investment will be accompanied in 2018 by a greater number of projects under development. As Reno Cardiff, Director of Capital Markets Business Space at Cushman&Wakefield in Spain explained recently in an interview with Eje Prime, “there is a great appetite for this kind of asset, but there is a shortage of supply”.

Due to the lack of stock right across the continent, consultancy firms and real estate experts are promoting the construction of new halls of residence to receive students over the coming years. Moreover, Cushman&Wakefield highlights another change: interest has increased from institutions looking to construct properties to house students, a cohort that was traditionally forced to rent homes from owners who, in many cases, set abusive prices.

Nevertheless, the growing appetite from funds for halls of residence is not driven by social reasons, but rather as the coming together of a sea of opportunities. In addition, the yields, despite having fallen in the last year, are still higher than those of other segments, such as traditional residential, offices and commercial. Only the logistics market offers yields in line with those of university halls of residence (…).

Original story: Eje Prime (by J. Izquierdo)

Translation: Carmel Drake

British Firm Collegiate Plans its Arrival in Barcelona After Opening Student Halls in Madrid & Valencia

9 January 2018 – Eje Prime

Spain is already a reference country in Europe for investment in student halls, as evidenced by the entry of foreign capital into the domestic market. The latest company to look for returns in this sector is Collegiate. The British firm is searching for an enclave in Barcelona, after opening student halls in Madrid and Valencia. The company has already announced that it plans to make its debut in the Catalan capital “soon”.

Collegiate is a company specialising in the management of student residences with a notable presence in the British Isles, where it owns assets in most of the capital and large cities. In Spain, the firm arrived first in Madrid with a hall of residence in Aravaca with 213 prime private rooms, whilst in Valencia, it entered in the maritime area with 350 rooms.

Both buildings have common areas that are typical for these types of prime assets, including a swimming pool, a fitness room, a cinema and a study area with library. The price per person in the Madrilenian hall ranges from €204 to €238 per week, depending on the features of the room, whilst staying in the building in Valencia costs between €196 and €204 per week.

Currently, Collegiate is embarking on an expansion process across Europe, as evidenced by its upcoming openings in Portugal, in Porto, and in another town with a great university tradition in the neighbouring country, Coimbra, which will be added to the hall of residence it recently opened in Lisbon. In Spain, nevertheless, its next major project is yet to come, given that the company has announced its upcoming arrival in Barcelona, a destination city for students from all over the world.

Investment in student halls amounted to €560 million in 2017 

The commitment from this international company to Spain comes in addition to those that have been made over the last year by a market that is clearly booming. In 2017, investment in student halls grew to €560 million, according to data from the real estate consultancy JLL. The significant growth, which compares to the barely €50 million that was invested in 2016, was driven primarily by transactions known as Erasmus and Rio.

Project Erasmus involved the sale of the portfolio of assets owned by the Resa Group, the largest in the country, to Greystar in an operation that was appraised at around €500 million. As a result of the purchase, the manager now owns 37 assets (33 of which are already operational) in Spain and is supported financially by a joint venture formed by the international investment funds AXA Real Assets and CBRE Global Investment Partners.

Meanwhile, the operation known as Rio involved the British manager GSA (Global Student Accommodation), which acquired Nexo Residencias from Threesixty Developments, a company owned by the fund Oaktree Capital, as part of an investment plan in which it plans to spend €300 million over the next five years. In addition, another recognised player, the investor group Catella, has also set its sights on this alternative investment business in Spain, with the acquisition of La Campana hall of residence in Pamplona.

Original story: Eje Prime (by Jabier Izquierdo)

Translation: Carmel Drake

AXA Buys 850 Prime Residential Assets in Spain for €170M

20 December 2017 – Eje Prime

AXA is redoubling its commitment to Spanish real estate. Two weeks after formalising the purchase of the largest portfolio of student halls in Spain, through a joint venture with CBRE, for which it paid Resa €0.5 billion, the investment arm of the insurance company has acquired 850 prime residential assets from Goldman Sachs and B Capital. This operation has been signed for €170 million.

Most of the homes purchased by AXA are located in the central areas of Madrid and Barcelona. Moreover, fourteen of the properties have been built since 2005 and the remainder have all been renovated within the last fifteen years. As such, the portfolio comprises luxury homes, which the company will revalue over the next few years by putting them up for rent.

Hermann Montenegro, Director of Investments at AXA Real Assets, also said that “the purchase of this portfolio of high-quality residential assets reflects our confidence in the residential markets in Madrid and Barcelona, where the growth in rentals has increased and the outlook for the next few years in terms of demand is very favourable.

This investment forms part of a long-term plan by AXA Real Assets to invest in sustainable and growth markets. In this context, in the last year, it has undertaken investments in Finland, Germany and the USA, amongst others.

Original story: Eje Prime 

Translation: Carmel Drake

Savills: Inv’t In Student Hall Market Will Far Exceed €600M In 2017

31 October 2017 – Eje Prime

Between €500 million and €600 million. That was the price paid by a group of international investors to acquire Grupo Resa, the largest platform of student residences in Spain, with 9,309 beds in 19 cities, including in Madrid, Barcelona and Salamanca. AXA Real Assets, CBRE Global Investment Partners and Greystar backed the company, a significant investment that goes hand in hand with the rise of this alternative market in Europe. This operation is a clear example of the boost that this alternative asset is enjoying in the real estate sector in Spain and across Europe.

In neighbouring France, investment in the sector rose by 245% and the forecast is that €250 million will be invested in transactions in 2017. But if there is a country whose student hall market has grown beyond all doubt, it is Germany. The German market has seen a five-fold increase in investment in student residences (380%) and expects to exceed the €1,000 million threshold by the end of this year.

These results all indicate that the whole European continent is now taking this market seriously, although there are still countries where the student hall business is much larger. In 2016, the main players in this sector, the USA and UK, saw a record-breaking volume of transactions involving the purchase of assets of this kind, amounting to €14,100 million, up by 5.4% compared to 2015 (…).

Data from the World Student Housing study, prepared by the real estate consultancy Savills, shows that migration is increasing in the world each year. Almost five million students studied overseas during 2015, which represents an increase of 130% since the beginning of the 21st century. The forecasts indicate that 8 million students will study abroad in 2025.

The Spanish case: great influx and new projects

As a Spanish-speaking country, Spain receives a large volume of Latin American students each year. Of the more than 100,000 international students that it welcomed last year, 10% were from Colombia or Peru. They are, together with the Italians, the overseas nationalities that flock in the greatest numbers to Spanish universities.

This international influx, which accounts for 7% of the total number of students on the state university map, has sparked interest amongst different funds looking to build and buy student halls in the country. The Swiss fund Corestate entered this market last year, with the purchase of a hall of residence in Madrid, for which it paid €13.5 million, whilst Temprano Capital is going to build a 10,000 m2 student residence in Esplugues de Llobregat (Barcelona). Moreover, the multi-national The Student Hotel is now active in Barcelona; and ThreeSixty Developments, a fund managed by Oaktree, sold the Nexo student halls to GSA.

In total, the student hall market in Spain expected to see investment of €600 million in 2017, with a yield on prime residences of 5.75%, above those in countries such as the UK and Germany (5% in both). With the sale of Resa alone, that target has already been fulfilled (…).

Original story: Eje Prime (by Jabier Izquierdo)

Translation: Carmel Drake