INTERVIEW RHC secures 5,000 beds for new JV with CPP

Global specialist real estate investor Round Hill Capital (RHC) has secured over 5,000 beds for its new European student housing platform with Canada Pension Plan Investment Board (CPP Investments) in the six months following the launch of the business, according to Brian Welsh, managing director and head of student at RHC.

‘Since announcing our partnership in October last year, we have acquired over 5,000 beds and we have just signed a new major portfolio deal in the Iberian region. We have the ambition to do more and continue to participate in the increasing institutionalization of the sector,’ Welsh told PropertyEU in an interview.

The JV, targeting assets in excess of €1 bn, is one of the largest European student housing ventures investing in standing assets and developments across PBSA markets in Continental Europe. CPP Investments’ initial allocation of equity is €475 mln while RHC is the operational partner under the Nido brand, a student housing operating arm which it bought from Blackstone in 2012.

The new platform with CPP is a result of RHC’s search for a partner started 18 months ago, Welsh said. ‘The student housing market continues to mature from an investment perspective, and investors with allocation to real estate are increasingly showing interest in the sector. We understood in 2020 that those investors who had been active in the UK would start turning their focus to Continental Europe and other would seek to take a pan European approach to the asset class. Given that we had a development platform, we identified an opportunity at the time to tie with a like-minded investor to develop assets and build a platform across Europe.’

While most of the 5,000 beds have so far been purchased in Spain and the Netherlands, RHC is currently actively bidding for assets in Scandinavia while also looking to enter the Italian student housing market. Welsh: ‘The past few years have really shown the resilience of this sector, particularly compared to more traditional property segments such as retail or offices which have suffered in the face of the pandemic. Appetite for student housing assets is growing everywhere but there are numerous limits to investors’ willingness to expand their portfolios. There is a lack of investment grade assets which means investors are now looking into development strategies. Even so, there are not many development partners around who have operations in different European markets.’

On the operational front, purpose-built student housing assets have performed strongly even during the recent health crisis.  ‘We did see an impact on occupancy in the 2020/2021 academic year but it was nothing like other residential sectors,’ said Darren Gardner, COO at Nido. As a way to cope with growing travel limitations, RHC and Nido took a number of initiatives so that their PBSA assets would appeal more to local students than international ones, he added. ‘In the 2021/2022 we were full and we met all our occupancy targets in every market.’

Gardner said the business has transformed itself since the pandemic, with a growing emphasis on services, amenities and communal spaces. In particular, the mental health and wellbeing of residents has become a major focus point over the past couple of years. ‘We really went to great lengths to offer support almost 24/7 and we engaged psychologists to provide online advise,’ Gardner said.

At the same time PBSA assets have become ‘full-style hotels’ with a concierge, delivery market, swimming and sport facilities etc. ‘We are developing a lot more communal spaces where students can interact, work together and feel part of a community, where they feel that they are not just spending the night, they feel they are part of something.’

See also interview with Round Hill Capital founder Michael Bickford in the June/July issue of PropertyEU Magazine

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