Tag: Corestate

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

Corestate to Build 400-Bed Hall of Residence in Sevilla

3 May 2018 – Eje Prime

Corestate is expanding its footprint in the Spanish real estate sector. The fund, which is headquartered in Luxembourg, has purchased a plot of land in Sevilla from Helena Rivero, daughter of the former President of Metrovacesa Joaquín Rivero, for the construction of its second hall of residence for students in Spain. Having operated in the country since 2015, when it arrived at the hand of Grupo Villar Mir, the group has signed the acquisition of 2,200 m2 of land on which it will construct a building with 413 beds.

The project in the Andalucían capital comes after another one that the fund started work on in 2016 in Madrid, where it is currently working on the finishing touches to its first hall of residence for students in Spain. It is a renovated building in the Moncloa district, which is going to have 206 rooms and whose doors are expected to open in September, according to El Confidencial.

The plot in Sevilla is located on the Eusa campus, the university complex of the Sevillan Chamber of Commerce. With a buildable surface area of 11,000 m2, the construction work is going to be led by one of Corestate’s brands, Youniq. On the inside, the hall of residence will have a gym, study rooms, a swimming pool and fully equipped kitchens. The amount of the investment that the fund is going to make in the project has not been revealed.

Last year, Rivero purchased the plot that she has now sold plus another one, spanning 1,700 m2, located in the Club Antares area from the Chamber of Commerce. For both plots, the institution received €7.5 million.

On the Club Antares plot, Rivero is planning to compete with Corestate by constructing a prime hall of residence for students. The Andalucían businesswoman is holding conversations with another fund, Temprano Capital, to carry out that project in conjunction with the specialist operator Collegiate. The firm and the manager are already working together in Spain on a project in Finestrelles (Barcelona), as Eje Prime revealed.

In 2017, university halls of residences were the jewel in the alternative asset crown, a segment that grew significantly last year. In total, the real estate sector invested €560 million in the construction of rooms for students, compared with just €50 million that was transacted in 2016, according to data from the real estate consultancy JLL.

Original story: Eje Prime

Translation: Carmel Drake

GSA With ‘High Honours’ in Spain: Investments of €300 million for New Acquisitions

2 November 2017

GSA’s overall objective is to have 250,000 beds under management by 2025. Barrelling into the Spanish market, it plans to manage 10,000 beds within the next five years.

GSA, a British group specializing in student residences business, has a strong presence in the Spanish market and intends to keep it that way. The company is planning its route in Spain, in which it plans to invest around 300 million euros over the next five years in adding 10,000 beds to its portfolio, as Christopher Holloway, CEO of GSA in Spain, and Miguel Muñoz, GSA’s director of real estate acquisitions, explained to EjePrime.

GSA’s initial foray into Spain was through Nexo, a company that it acquired mid-year from Threesixty Developments, a firm owned by funds managed by Oaktree Capital Management. Nexo took its first steps in the hands of Holloway and Muñoz with the purchase of the Residencia Galdós in Madrid.

In the following years, Nexo acquired more assets in Madrid, Alcalá de Henares and Barcelona. “GreenOak wanted to leave the shareholding since its horizon in the company was five to seven years, and GSA wanted to start operating in Spain,” the executive added. GSA, which sees its investment in Nexo as “something long-term”, is now ready to grow in Spain through the acquisition of new real estate assets where they can develop their business.

While GSA’s overall goal is to have 250,000 beds under management by 2025, barrelling into the Spanish market, the plan is to manage 10,000 beds within next five years. For this, the group foresees an investment of between 300 million euros and 350 million euros, although “it could grow,” meaning that it is an “approximate, not closed” investment figure.

GSA currently manages two projects in Barcelona that will involve an investment of almost 60 million euros

“To carry out our plan for the coming months, we focused our objective on three main tracks: one part would be the purchase of land for the development of new student residences; another the acquisition of assets, with its subsequent rehabilitation and management, and a third possibility, which is the management of third-party assets, through management contract agreements.

GSA, which has a presence in Germany, China, Japan, Australia, the United Kingdom, Ireland and Dubai, has already set to work on the first two projects to be carried out in Spain under its management. They are two residences located in Barcelona. The first, in the South Campus of the University of Barcelona, will involve an investment of 30 million euros. “For now, we have all the licenses to start building, although construction will not start until February,” GSA stated.

The second project in the Catalan capital will be in the Sants Station and will be carried out in collaboration with the Barcelona City Council. This residence, which is already being built, signified an investment by the group of more than 27 million euros.

“We are now looking for new assets in our primary markets, which are Madrid and Barcelona, and then we will expand our focus to other cities, such as Salamanca, as well as cities in the south and north of Spain,” both executives added.

Regarding the purchase of new companies, at the moment, the CEO of GSA in Spain dismisses the possibility: “the only company that could interest a group like ours is Resa, and its sale was carried out recently.” “For now, we do not know of any other company that interests us,” he says.

The business in Spain

As a Spanish-speaking country, Spain receives a large number of Latin American students every year. Of the more than 100,000 international students that arrived in the last year, 10% were Colombians and Peruvians. They are, together with Italians, the foreign nationalities which most contribute students to the Spanish universities.

The Swiss fund Corestate paid 13.5 million euros for a college in Madrid

This international influx, which represents 7% of the total number of students in state universities, has led different funds to become interested in the construction and purchase of residences in the country. The Swiss fund Corestate entered the market last year, through the acquisition of a college in Madrid, for which it paid 13.5 million euros, while Early Capital will build a residence of 10,000 square meters in Esplugues de Llobregat (Barcelona). Also, the multinational The Student Hotel is already active in Barcelona.

In total, the market for student residences in Spain is expected to receive investments of €600 million in 2017, with a return on prime residences of 5.75%, above countries such as the United Kingdom or Germany (5% in both). Just with the sale of Resa, that quota has already been fulfilled.

Original Story: EjePrime – C. Pareja

Translation: Richard Turner

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

Villar Mir Negotiates Partial Sale Of Fifth Tower To Hispania

29 September 2016 – Expansión

According to the businessman Juan Miguel Villar Mir, the Villar Mir Group has begun negotiations with the Socimi Hispania to join forces for the development of the fifth tower, the new skyscraper in the north of Madrid, next to the Cuatro Torres Business Area complex.

It is one of the most important buildings in the capital in terms of investment, given that the developers will need around €500 million to cover the construction and rental costs – an initial lease has been granted for a period of 75 years.

Sources at the family holding company have confirmed that preliminary conversations have begun, aimed at Hispania’s entry into the project “as a minority shareholder”. Other sources state that the Socimi, managed by the Azora group and in which George Soros holds a stake, may be interested in acquiring 100% of the building, which will be leased in its entirety. Nevertheless, the Villar Mir Group assures that it will maintain the majority stake.

The fifth tower project, which Villar Mir won at the end of 2014 in a tender organised by the Town Hall of Madrid, has already selected its tenants. Earlier this year, the IE Business School agreed to lease 50,000 sqm of the building for its campus. The bottom part of the complex, measuring 12,000 sqm, will house leisure areas, a shopping arcade and a health centre, which will, in theory, be operated by the Quirón Group. The project, promoted by the Villar Mir family, still needs to obtain the definitive permits from the mayoress of Madrid, Manuela Carmena.

Partners

In September 2015, the Swiss investment fund Corestate announced that it had agreed to form a joint venture with the Villar Mir Group to jointly develop the fifth tower. Six months later, in March 2016, Juan Miguel Villar Mir qualified that announcement by stating that the agreement with Corestate had not been signed yet. With or without Corestate, the negotiations with Hispania are happening at a time of peak activity for Spain’s listed Socimis. Hispania reached the final round of the tender to acquire the building, after it partnered up with Ferrovial, but Villar Mir won the 75-year lease by offering to pay an annual fee of €4 million, equivalent to twice the bid price. (…).

Divestments

The search for partners forms part of the strategy being pursued by the Villar Mir’s holding company to finance its multi-million investment commitments through Espacio and OHL, without increasing its debt, which amounts to €14,000 million. The other source of extraordinary income comes from the sale of its assets. (…).

The group needs funds to tackle its three major real estate projects (the fifth tower, the Canalejas Complex and the War Office in London), as well as several toll roads in Latin America.

Original story: Expansión (by C. Morán and R. Ruiz)

Translation: Carmel Drake

Mastercard & Commerzbank Move Into Torre de Cristal

13 September 2016 – El Confidencial

The Cuatro Torres district is the new “City” in Madrid and is one of the areas where the leading real estate players have been operating with the most intensity over the last two years. The company chaired by Ignacio Garralda, Mutua Madrileña, fired the starting gun in February 2015, when it signed an agreement with KPMG to lease 18 floors in the Torre de Cristal, a third of the entire building, in an operation that allowed it to boost its occupancy rate from 42% to 70%.

Just four months later, Grupo Villar Mir put Torre Espacio up for sale, which the Philippine Group Emperador ended up buying for €558 million. By then, the skyscraper where PwC has its headquarters – the black tower that is also home to the Eurostars Hotel – had already changed hands, thanks to Merlin’s acquisition of Testa, and the sheikh Khadem al Qubaisi had already started putting the feelers out to sell Torre Cepsa, the skyscraper for which Amancio Ortega has offered to pay €490 million, according to El Confidencial.

Amidst this game of Monopoly being played out at the north of Paseo de la Castellana, two overseas financial entities, Mastercard and Commerzbank, have decided to transfer their offices to Torre de Cristal, the highest building in Spain, which measures 250m tall and contains 52 floors.

The credit card company has already moved into the skyscraper, whilst the German bank is currently undertaking refurbishment work ahead of its move before the end of the year.

But these two entities are not the only ones who have decided to move into the building owned by Mutua Madrileña. In recent months, following the arrival of KPMG with its 1,900 professionals, Torre de Cristial has seen a significant increase in the number of itstenants, after sealing several agreements with companies such as Red Hat, Cerner and Gesternova, which has allowed it to increase its occupancy rate to more than 82% and lease out a further 5,000 sqm.

Hardly any free floors left

The direct impact of the appetite for these skyscrapers from tenants and owners alike means that there are hardly any free floors left in the Cuatro Torres district (…).

Tower Sacyr (now owned by Merlin) is the only fully occupied tower, but it had to drastically reduce its rental prices to reach an agreement with PwC in 2011, during the worst years of the crisis, in order to acheive that.

Bankia also demanded that Cepsa occupy 100% of Torre Foster, but the oil company has now decided to put eight vacant floors up for rent. Those floors have a surface area of 13,000 sqm, a figure that is slightly higher than the 10,200 sqm that is also being marketed in Torre Espacio, the skyscraper where the main tenant is Grupo Villar Mir, which occupies half of the building.

These numbers show that the average occupancy figure for the Cuatro Torres district now exceeds 80%, a ratio that it has reached at a time when Azca, the traditional financial district in Madrid, is seeing a significant number of its properties undergo profound transformations.

The Cuatro Torres area will be further consolidated as a business centre with the upcoming construction of the so-called Fifth Tower, a skyscraper being developed by Grupo Villar Mir, in partnership with the fund Corestate, which Instituto de Empresa will occupy along with the health group Quirón, according to experts.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

Villar Mir & IE To Sign An Agreement For Fifth Tower

26 January 2016 – El Confidencial

Nine months after winning the bid arranged by the Town Hall of Madrid to construct a skyscraper in the capital’s new financial district, Grupo Villar Mir has reached an agreement with Instituto de Empresa (IE) to allow the business school to occupy the majority of the building.

El Confidencial has confirmed with several sources close to the negotiations that the two parties expect to sign an agreement this week. And that signature will signal the starting gun for Madrid’s new skyline, as well as ensuring the viability of the project after several months of uncertainty.

The future picture of the five skyscrapers underwent some serious difficulties last summer when the initial candidate proposed by Grupo Villar Mir, the prestigious Mount Sinai hospital group, decided not to go ahead with its plans to open a health centre in the fifth tower.

In fact, the owner of OHL was awarded the land on the basis of the proposal that it would house a private hospital, with recreation and retail service areas. The plans were presented together with a letter of intent from Mount Sinai, saying that it would occupy the fifth tower, but that ended up being worthless.

Following the exit of the US group, Villar Mir began making contact with several real estate consultancy firms to find a new tenant that would comply with the requirements imposed by the town hall, namely that the property must be used for health or education purposes. Those conversations have ended up with the proposed agreement with the IE Business School.

The prestigious centre, whose MBA has just been chosen as the 12th best in the world and the best in Spain according to the Financial Times, is continuously looking for spaces to expand its educational offering. As such, it is now the neighbour with the most properties in the prestigious neighbourhood of Salamanca, which is home to its different centres, above all, around Calle María de Molina.

With the move to the fifth tower, the educational empire controlled by Diego del Alcázar would expand its classrooms beyond its traditional area of operation, but would maintain its policy of operating within Madrid and in the most representative areas for the business world.

75 year concession

The fifth tower is expected to be completed within four years, by 2020. It is an ambitious plan, which Grupo Villar Mir will tackle in partnership with the Swiss fund Corestate. The two partners have created the company Iberian Corestate, whose first operation will involve the investment of €240 million in the new skyscraper.

On the basis of the original design that won the bid, the new building will have 52,500 m2 of public space and 17,500 m2 of retail space. It will be constructed on land that will continue to be owned by the town hall, but which will be operated by Grupo Villar Mir for the next 75 years.

The group was awarded this concession after committing to pay a fee of €4 million per year to the town hall for the duration of the concession period, a figure that is much higher than the €1.9 million bid starting price.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake