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

 

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