Student Residences Leads Market with Yield of 5.5%

9 July 2019 – Richard D. K. Turner

According to a study by Jones Lang Lassalle (JLL) in April, a total of 47 student housing developments were currently underway in Spain. Of those, 7,500 will be ready by next year and another 10,000 by 2022. The estimated total investment is expected to reach €1 billion. However, the market needs another 400,000 beds to catch up with existing demand.

The report also highlighted the sector’s comparatively attractive yields.  Student residences have a yield of about 5% in Madrid and Barcelona and of 5% in smaller cities in the country. That yield equals the yields for logistics assets and geriatric residences. The yield for hotels (4%), retail premises (3.15%), offices (3.50%) and residences (3.50%) all lag behind.

The market for student residences in Spain is currently dominated by Resa and Nexo Residencias. U.S.-based Valeo, Temprano Capital Partners and Syllabus have also began operations in recent months.

Original Story: El Confidencial – Álvaro G. Zarzalejos

US Firm Valeo Groupe Wants to Build 20,000 Beds in Student Halls in Spain

11 June 2019 – Cinco Días

After teaming up with Bankinter to invest in Spain last year, the US firm Valeo Groupe has now announced that it wants to become the market leader in the student residence sector. According to its CEO for Europe, Peter Haspel, “Our objective in Spain is to reach 20,000 beds”.

The firm does not have a detailed timeframe at this stage but its target would make it the market leader or one of the largest players in the country, alongside Resa, which currently has 10,000 beds, and Nexo Residencias, which is growing rapidly. Haspel considers that Spain has the capacity for 500,000 beds compared with the existing supply of 98,000.

The company has already designed a first investment plan amounting to between €300 million and €400 million to build 10 halls of residence in Spain and Portugal over the next two or three years.

It has already started work on a project in Granada and is about to launch one in Porto. They will be followed by new halls in other major cities such as Madrid, Barcelona, Lisbon, Valencia, Sevilla and Bilbao.

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation/Summary: Carmel Drake

Harrison Street Joins Forces with Nexo & Injects €200m

8 April 2019 – Cinco Días

The US fund Harrison Street has just injected almost €200 million into a company owned by Nexo Residencias, with the aim of launching a growth plan. To date, the company was owned in its entirety by GSA (Global Student Accommodation), a group operated from the UK and backed by capital from Dubai. GSA purchased acquired Nexo from the fund Oaktree in 2017 for €140 million.

But now, Harrison Street has become the majority stakeholder of Nexo under a co-investment formula, which the Dubai group uses in the different markets in which it operates. Harrison Street is already the firm’s partner in several other countries and so the partnership in Spain is merely an extension of its successful relationship.

Nexo is currently undergoing a major expansion process. It is building two halls of residence in Barcelona and one in Valencia. GSA’s objective is to grow its existing portfolio of 1,500 beds to between 10,000 and 14,000 in time.

Harrison Street is a real estate fund manager based in Chicago, which has assets under management amounting to around USD 18 billion (€16 billion).

Original story: Cinco Días (by Alfonso Simón and Pablo M. Simón)

Translation/Summary: 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

GSA Wants to Invest €0.5bn in Student Halls in Spain

7 December 2017 – Expansión

The British firm Global Student Accommodation (GSA), which specialises in student accommodation, arrived in Spain in June with the purchase of Nexo Residencias from Oaktree Capital Management. This move, which allowed it to add a portfolio of 2,300 beds in the country, was just the beginning, given that the company plans to reach 10,000 beds by 2025 and invest approximately €0.5 billion in the country. In this way, Spain would account for between 20% and 25% of the firm’s portfolio in Europe, which in turn is expected to account for 45% of the total worldwide.

“To date, we have invested €0.2 billion and we expect to invest approximately €0.5 billion in total”, explained the founder and CEO of GSA, Nicholas Porter, in an interview with Expansión.

Spain represents one of the company’s priority markets, although the firm also plans to expand its presence to other countries in Europe and Latin America, to reach 250,000 beds around the world by 2025. GSA is present in eight countries and thirty cities in two regions: EMEA (Europe, Middle East and Africa) and Asia-Pacific.

“Over there next ten years, there are going to be 100 million more students in university education. That trend is going to be driven by the growth of the middle class in China, India and other regions in Asia. The globalisation of university higher education and educational institutions exporting their brands will allow us to reach more markets than ever”, he states.

Porter explains that, of the company’s objective of reaching 250,000 beds around the world by 2025, “right now, we have achieved 10% of that figure”.

GSA promotes, manages and invests in student halls in locations close to the most important universities in the world.

Specifically, the company currently has projects underway with forecast investment of USD 1 billion around the world and a portfolio under development of around 21,000 beds. Moreover, to achieve its objective, the firm plans to leverage its brand through franchises in other markets, such as, for example, Latin America.

New markets

The company operates its halls of residence through the brands Uninest Student Residences, The Student Housing Company and Nexo Residencias, which it acquired in June 2017, representing its debut in Spain. “We see Nexo as an expansion platform, not only in Spain, but also in the south of Europe and Latin America”.

Currently, GSA has 1,500 operational beds in Spain and 900 beds under construction in Barcelona, which it plans to open in September 2019. Specifically, the operating portfolio is located in the centre of Madrid and includes: Galdós, with 370 beds, in Ramiro de Maeztu; El Faro, inaugurated in September 2016 and located in Moncloa with 358 beds; and Claraval, on c/ San Bernardo, with 186 beds. It also owns the Lope de Vega hall of residence in Alcalá de Henares, which it recently opened and which houses 468 students, both from Spain and overseas.

Moreover, it has two additional development plans underway in Barcelona, which will be ready for use in 2019 with 900 more beds (…).

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake