An opportunity fund advised by pan-European real estate investment manager Tristan Capital
Partners has invested £439 million in a new UK student housing joint venture that it has formed
with the Liverpool-based developer-operator Downing.
European Property Investors Special Opportunities IV (EPISO 4) has acquired a 90% interest in
the joint venture, which owns a 2,756-bed portfolio of six halls in some of the most vibrant
university cities across the UK. It has also committed to a further forward purchase of another
residence in Glasgow next year and has the additional option to purchase a prime 32 storey,
578 bed scheme in the heart of Vauxhall, London in 2018, taking the potential number of total
beds in the portfolio to 3,644.
Peter Mather, Managing Director of Investments at Tristan Capital, said: “This joint venture
allows us to invest in best-in-class, newly purpose-built student accommodation portfolio,
located in leading university cities. Having an experienced operating partner is critical for
investing successfully in this niche sector and Downing offers a wealth of experience, unrivalled
industry relationships and a proven track record as a first class developer and operator.”
Downing will retain a 10% stake in the joint venture, which will acquire the eight assets in two
tranches. Downing developed all six of the existing halls in the past two years and will deliver
the development in Glasgow and the potential development in London. The management team
at its Downing Students affiliate has more than 30 years of operational experience in student
accommodation and has a track record of achieving strong occupancy rates.
Simon Garnett, Finance Director of Downing, said: “We are delighted to have completed this
agreement with Tristan and look forward to working with them on this portfolio. This
partnership further establishes Downing as a major player in the student accommodation
sector. Our market-leading portfolio and existing immediate pipeline of developments gives us
a strong presence across the UK’s leading universities cities.
“We are proud of our Downing Students brand which has become a hallmark for high-quality,
well-managed, innovative developments which offer outstanding pastoral care. This investment
strengthens our position to capitalise on additional growth opportunities and will allow us to
further our ambitious expansion plans.”
The eight properties are in close proximity to members of the Russell Group of the UK’s top 24
While the majority of the 3,644 beds in the future eight-property portfolio will be leased directly
to students, 11% are leased directly by the universities themselves and an additional 25% are
under nomination agreements with these education establishments.
The number of full time students in the UK has increased by 21.5% since 2005/6, to over 1.7m
full-time students in 2015/161. However, there remains a structural shortage of supply, with
only 30%2 of students able to access purpose built student accommodation. In addition, the
development pipeline to 2019 is estimated at only 30,000 beds per annum, lagging the forecast
increase in student numbers at 60,000 per annum.
Ric Lewis, CEO and Chairman of Tristan Capital Partners, said: “Student accommodation is
becoming a mature and liquid asset class and is of increasing attractiveness to institutions based
on robust and growing demand for more units of accommodation by the UK higher education
institutions and a structural undersupply of purpose-built stock. The majority of purpose built
beds are currently owned in small portfolios and there is expected to be further consolidation in
the sector, which we are keen to explore.”
The joint venture follows EPISO 4’s investment in the redevelopment of Plymouth’s historic
Derry’s department store earlier this year. The ‘Plymouth Cross project’, which received full
planning consent in August 2016, involves remodelling, extending and refurbishing the building
to create a multi-use asset which includes a 500-bed student accommodation block.
Senior financing for the portfolio was provided by AIG. Advising EPISO 4 on the purchase were
BLP, EY and Knight Frank. Downing’s advisers were JLL, Hill Dickinson and DLA.
NOTES TO EDITOR
• The number of full time students in the UK has increased by 21.5% since 2005/6, to over
1.7m full-time students in 2015/163.
• There has been a 3% annual growth rate in university applications, which have increased
from 534,000 in 2005/6 to 718,000 in 2015/16, a 3.0% annual growth rate4.
• Supply constraints means the development pipeline to 2019 is estimated at only 30,000
beds per annum, lagging the forecast increase in student numbers at 60,000 per annum
and putting further pressure on national supply5.
• UK student housing has evolved into a mature and liquid market, with transaction
volumes reaching £5bn and £3bn in 2015 and 2016 respectively6.
• Investment demand for student housing in 2017 has been robust and the full-year
investment volume is expected to rise to more than £5bn, close to its 2015 record.
About Tristan Capital Partners
Tristan Capital Partners is an employee-owned investment management boutique specialising in real estate investment strategies across the UK
and Continental Europe. Tristan’s pan-European real estate funds include core-plus and value-added/opportunistic strategies with total assets
under management of over €7 Billion. Tristan is the portfolio manager for core plus funds Curzon Capital Partners III and Curzon Capital Partners
IV and for the private equity funds European Property Investors, LP, European Property Investors Special Opportunities, LP and European
Property Investors Special Opportunities 3, LP and European Property Investors Special Opportunities 4 LP. Tristan’s headquarters are in London
and it has offices in Luxembourg, Milan, Paris, Stockholm, Dusseldorf, Madrid and Warsaw.
Source : Company