CPP Investments makes €1bn student housing bet with Round Hill

The joint venture between the Canadian pension plan and the London-based firm will be one of the largest-ever partnerships in the sector in Europe.

CPP Investments has launched a new European student housing partnership with Round Hill Capital, affiliate title PERE has learned.

The Canadian pension plan has agreed to make an initial €475 million equity commitment to the partnership, which will target a portfolio size of more than €1 billion. The joint venture will be one of the largest European purpose-built student accommodation partnerships, representing approximately a fifth of the total annual PBSA dealflow within the region, according to the London-based specialist real estate firm.

The partnership will invest in existing assets and developments across PBSA markets in continental Europe. The joint venture is expected to have approximately 2,000 beds in Spain and the Netherlands by year-end, based on the partnership’s current investment pipeline. The assets in the partnership will be operated primarily by Nido Student, Round Hill’s specialist PBSA brand, which manages over 5,000 beds across the UK, Germany and Ireland, and has a pipeline of more than 3,000 beds in Ireland, Germany, Portugal and Spain.

Round Hill is one of the world’s largest managers in student housing, having made 40 acquisitions totalling €1.8 billion in the sector across the UK and Europe since 2002. CPP likewise has been a major investor in the global PBSA market. Notably, the Canadian pension fund manager acquired 100 percent of the portfolio and management platform of student accommodation provider Liberty Living from the Brandeaux Student Accommodation Fund for approximately £1.1 billion (€1.3 billion) in 2015. CPP subsequently sold the business to The Unite Group in 2019 for net proceeds of C$1.3 billion (€910 million).

The joint venture with Round Hill marks CPP’s return to the European PBSA sector, which is expected to benefit from increasing demand as other countries have taken a harder stance on international students, according to a November 2020 report from Savills.

“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,” Andrea Orlandi, CPP’s head of real estate Europe, said in a statement. “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.”

Brian Welsh, head of student at Round Hill, added: “There are unprecedented levels of capital looking to invest in resilient income streams, but the challenge many will face is having access to dealflow 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.”