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Mon October 15 2018

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Investor backing for more student halls

1 Oct Student accommodation developer Watkin Jones has secured funding for four developments totalling £180m.

Watkins Jones will build a 778-bed development on Whitefriars Lane in Coventry
Watkins Jones will build a 778-bed development on Whitefriars Lane in Coventry

Watkin Jones has forward sold four purpose-built student accommodation (PBSA) developments, before construction has started, to a joint venture of investment firms KKR and Round Hill Capital. 

Two of the developments are in London, one is in Glasgow and one is in Coventry. Together they comprise 2,163 student accommodation beds and associated commercial use classes. (See table below.)

There is also a conditional deal to sell a fifth development, in Bristol, subject to it securing planning permission.

Watkin Jones will receive d £180m over the course of the four forward sold, net of all client funding and acquisition costs.  This will be payable over the period September 2018 to September 2020.  Money for the Bristol scheme will be agreed once the option is exercised.

This is the first student housing transaction for KKR and Round Hill through their JV in the United Kingdom. They have acquired a couple of student accommodation developments in the Netherlands in recent months and have aspirations to buy more across mainland Europe and the UK.

The buildings will be managed by Nido Student, Round Hill’s established operational platform and brand for European student accommodation.

Michael Bickford, founder and CEO of Round Hill Capital, said: “Round Hill has a long-established track record of successfully investing and developing as well as asset managing student and wider residential real estate in Europe, and currently operates circa 65,000 accommodation beds in eight European countries. We are also funding a pipeline of over 9,800 student accommodation beds across the UK, Ireland, the Netherlands, Portugal and Spain.

“This is our joint ventures’ first student housing development scheme in the UK, where select areas of the UK student housing market still suffer from structural supply constraints in key university cities. Taken together with the sector’s growing demand for high specification and well-located PBSA and our proven Nido brand and operating expertise, we are continuing to expand further in line with our existing growth strategy in the UK and wider Europe, helping to alleviate housing pressures.”

Nido chief executive Brian Welsh said: “We are pleased to acquire this fantastic UK student housing portfolio as we continue to further grow our strong pipeline of attractive potential investments in the UK and across wider Europe. We are accelerating our expansion and look forward to making Round Hill one of the largest global developers and operators of student accommodation, supported by Nido Student, our well-established student management platform.”

KKR and Round Hill secured financing for the schemes from Wells Fargo. KKR’s investment was made through its Real Estate Partners Europe fund.

Watkin Jones chief executive Mark Watkin Jones said: "We are delighted to announce that we have successfully completed the sale of a portfolio of four student accommodation developments and exchanged an option agreement, conditional on full planning consent, to sell a fifth development in Bristol.

"Watkin Jones has an established reputation as a leading developer of high quality purpose-built student accommodation and it is this reputation that has led us to work with KKR and Round Hill in their first joint investment in the UK student housing market.  This is further validation of the ongoing opportunity for Watkin Jones in the sector and the initial consideration of £180m, for the four forward sold sites, helps further build the group's revenue visibility for the coming financial years."

Development

Number of beds

Anticipated delivery date

Kyle Street, Glasgow

 

401 (341 clusters / 60 studios)

 

September 2019

Albion Way, London

283 (245 clusters / 38 studios)

September 2020

Forest Road, London

353 (298 clusters / 55 studios)

September 2020

Whitefriars Lane, Coventry

778 (681 clusters / 97 studios)

September 2020

Wilder Street, Bristol

348 (303 clusters / 45 studios)

September 2021 (subject to planning permission)

MPU

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