Round Hill Capital and Canada Pension Plan Investment Board (CPP Investments) have entered into a joint venture to invest in European purpose-built student accommodation (PBSA) assets.
The JV, targeting assets in excess of €1 billion, will be one of the largest European student accommodation partnerships, according to a joint statement by the companies.
It will invest in standing assets and developments across PBSA markets in Continental Europe, with capacity to invest in the major education markets across the continent.
CPP Investments’ initial allocation of equity will be €475 million.
Round Hill Capital has invested over €1.8 billion to date in student accommodation across the UK and Europe with 40 PBSA acquisitions across the UK and Europe since 2002, including recent acquisitions in Spain, Germany and the Netherlands worth over €150 million.
Assets will be operated primarily by Nido Student, Round Hill Capital’s PBSA brand.
Commenting on the JV, Michael Bickford, founder and CEO of Round Hill Capital, said: “We are delighted to be partnering with CPP Investments in our joint mission to raise the quality of PBSA assets across the continent. This joint venture, one of the biggest European PBSA partnerships to date, represents another market leading investment platform for Round Hill Capital. This ground-breaking deal illustrates the strength of our investment offering underpinned by our vertically-integrated structure which includes Nido, a market-leading student housing brand. With 40 PBSA acquisitions to date, worth a collective €1.8 billion, we are firmly established as a market leader.”
By year end the JV is expected to have approximately 2,000 beds secured in Spain and the Netherlands based on contracted assets and those under exclusivity.
Andrea Orlandi, Managing Director, Head of Real Estate Europe, CPP Investments, said: “Demand for high-quality student accommodation in many European countries is underpinned by structural changes, including increasing tertiary education participation rates and increasing international student mobility, but is contrasted by limited current supply. Our new partnership with Round Hill Capital will increase our exposure to this asset class across European markets, leveraging their deep sector knowledge and insight to meet the needs of students and drive long-term value for CPP contributors and beneficiaries.”
European PBSA represents a rapidly maturing investment market and current data suggests that the number of students choosing to study in Europe will rise over the next five years, yet the majority of European cities lack sufficient high-quality student accommodation to support such growth, according to the statement.
”As a consequence, the demand for private sector PBSA provision is expected to rise significantly, and today’s landmark venture establishes one of Europe’s largest sources of capital to meet this need. Round Hill Capital has a 19-year track record of successfully investing in, developing and operating such assets across Europe.”
Brian Welsh, Head of Student at Round Hill Capital, said: “There are unprecedented levels of capital looking to invest in resilient income streams, but the challenge many will face is having access to deal flow and having the market insight and data to extract maximum value. Our long track record in this sector and local presence in core European markets has helped us establish a market-leading position over many years.
“We are seeing significant scope for growth in many markets and together with our student operating platform, Nido, we have the track record to navigate the nuances that define many different cities across Europe. High quality housing remains in short supply in many locations and while much more can now be done online, the need for face-to-face engagement and the desire for a world-leading education will continue to drive customer growth across key markets.”