Catella fund buys student housing assets in Berlin and Greater Paris

Catella fund buys student housing assets in Berlin and Greater Paris
Image:Courtesy of Catella

Berlin-based Catella Residential Investment Management (CRIM) announced it has acquired two student housing assets in Berlin and Greater Paris for €60 million for its Catella European Student Housing Fund II (CESHF II).

The latest deals follow hard on the heels of the Fund’s second closing in May when it raised €45 million. Less than 10 months since its launch, the Fund has now acquired six  properties with almost 1,500 residential units in four countries across Europe, with a projected internal rate of return (IRR) of 5% per year and a direct income return of 3.5%. CESHF II is the successor of Catella’s first European Student Housing Fund, which has generated an IRR of 7% per annum since its launch in 2013 until mid-2020.

In Berlin — the largest market for student housing in Germany with approximately 195,000 students out of a total population of around 3.8 million — the Fund has purchased a property in the northeastern district of Weißensee for approximately €40 million.  The planned five-storey student residence comprises 261 modern fully furnished units with compact floor plans varying between 16 and 41 sqm over a total surface area of approximately 6,300 sqm.

In France, the Fund has acquired a project development from Imodev comprising 240 apartments with a rentable area of 5,108 sqm incl. common space of 481 sqm in Cergy in the Île-de-France region, about 25 km northwest of Paris, for around €25 million.

‘The market for education and thus also for student housing is in a state of upheaval in the Covid-19 era

“The market for education and thus also for student housing is in a state of upheaval in the Covid-19 era. Most universities are closed and online seminars currently dominate the curriculum. However, the limitations of this way of learning and the absence of a social component have also become clearly visible. We expect there will be a mix of both forms of learning — virtual and physical – in the future. We also think we will see the same trend as when the dotcom bubble burst in 2000 and after the onset of the Great Financial Crisis in 2008, with student numbers increasing significantly during and after the Covid-19 crisis and stimulating demand for student housing in a highly underserved market,” said Michael Keune, Managing Director at CRIM.

In June 2020, the unemployment rate of young people in Germany aged under 25 was more than 40% above the comparable level in 2019, Keune added. “The corona generation will be forced to place even greater emphasis on education than previous generations as it will be more difficult for them to find a job, both during and after completing their studies. Already the under-25 age group is being hit the hardest by the crisis.”

Alexander Brüning, fund manager at CRIM, said: “In terms of student housing, Berlin and Paris have supply rates of around 10%, which means that only one in 10 students in both these cities will find a place to live. Creating affordable housing for students is therefore at least as important today as it was before the Covid-19 crisis. Affordable student residences in good locations with access to top universities also continue to offer investors attractive and stable returns.”

BE REAL Investment Management, CRIM’s local partner in France for asset and investment management, advised on the transaction. Frankfurt-based Institutional Investment Partners GmbH (2IP) provides the AIFM platform for CESHF II.