Starwood/Round Hill JV buys UK student homes portfolio
Starwood Capital Group and Round Hill Capital have bought, through a new joint venture involving controlled affiliates, an operational portfolio of six UK student houses and entered into a forward funding agreement for a Newcastle scheme for £120m.
The direct-let properties are in central locations in university cities across the UK.
The portfolio comprises 1,595 beds in a mixture of mainly large studios and ensuite bedrooms in cluster flats. The standing assets consist of The Haymarket in Edinburgh, Chestnut House in Cambridge, The Walls in Southampton, St James House in Glasgow and Union Square and Stepney Yard, both in Newcastle. The forward funded development in Newcastle is expected to be delivered in time for the 2018–19 academic year.
“Starwood Capital has an established platform of student housing in the U.S., with 6,855 beds under management, and based on our strong performance and track record, we are keen on expanding our footprint in this sector in the U.K.,” said Zsolt Kohalmi, Head of European Acquisitions at Starwood Capital Group. “We are excited to work with Round Hill Capital and Nido as our partners on this investment, which boasts assets in superb locations and strong student markets that provide a high-quality offering to students. We believe that the U.K. is and will continue to be one of the top educational destinations for international students. We believe that student housing offers the potential for compelling risk-adjusted returns - based on a history of producing robust rental growth and maintaining high occupancy even amidst the last economic crisis - and we look forward to building on this transaction to establish a sizeable student housing platform in the UK.”
The portfolio will be managed by Round Hill’s Nido Collection brand and operational platform for student accommodations.
“Round Hill has an established and successful investment track record and operational expertise in premium student accommodation in the UK, and we are very pleased to make this acquisition through our new UK joint venture with Starwood Capital Group,” said Michael Bickford, Founder and CEO of Round Hill Capital. “We look forward to actively managing and repositioning the portfolio and building a substantial premium student accommodation platform in partnership with Starwood Capital Group in key cities across the U.K. The demand for higher education in the UK is continuing to rise but the student housing market still suffers from structural supply constraints for high-specification properties in key university cities. Taken together with the sector’s growing and stable cash flows and our proven Nido Collection brand and operating expertise, this acquisition provides a compelling investment opportunity.”
Starwood Capital Group and Round Hill were advised by Savills on the acquisition.