Greystar has selected a frontrunner to fund its £700m of ongoing student accommodation purchases in central London, Real Estate Capital can reveal.
The UK student accommodation market is booming at present as rival investors look to assemble portfolios, establish critical mass and build up mature operating businesses and brands.
Earlier this month Canada Pension Plan Investment Board completed its £1.1bn purchase of Liberty Living from the Brandeaux Student Accommodation fund whilst Russian investor LetterOne clinched a deal to buy The Carlyle Group’s Pure business for £532m.
It is thought that a five-year loan is being put in place for Greystar which reflects a loan-to-value close to 70%. Citi is considering a CMBS of the deal as a possible exit.
Greystar exchanged on the deal to buy Nido from Round Hill Capital last week for approximately £600m. The 2,375-bed portfolio comprises three luxury student accommodation assets in King’s Cross, Notting Hill and Spitalfields.
In a statement issued on exchange for the Nido purchase Brett Lashley, Greystar’s UK managing director said: “Our purchase of Nido Spitalfields, Nido Kings Cross and Nido Notting Hill align perfectly with Greystar’s strategy and philosophy of owning and operating assets that set a new standard of service and resident experience in the student accommodation industry.”
Round Hill bought Nido in 2012 from Blackstone for £424m. The deal was financed using a £266m senior loan from M&G Investments and an £80m mezzanine loan from Och-Ziff, both of which had a five-year term and have been repaid early as a result of the sale.
In addition to Nido, Greystar has agreed to buy the high-specification Hult Tower at Assam Place on Commercial Road. The 317-bed block was put up for sale last August for £100m, reflecting a net initial yield of 5.4% by Aldgate Developments Guernsey. Founded in Boston, Hult is the world’s largest graduate business school.
Greystar’s UK student accommodation portfolio now stands at over 15,000 beds from a standing start in less than two years.
It includes two £300m portfolios bought from Lone Star and Royal Bank of Scotland, both previously part of the collapsed Opal Group, which Citi also part-funded. In December 2013 it bought a 1,135-bed, three-asset London portfolio for £190m from Unite and OCB.
Citi declined to comment.