Kinetic and Kayne Anderson JV originates first Continental European PBSA loan

The partnership, Rhize Capital, has provided a €100m loan for two schemes in Italy.

Rhize Capital, a joint venture between student accommodation specialist lender Kinetic Capital and US private equity firm Kayne Anderson Real Estate, has originated its first Continental European loan – a €100 million facility to developer Proprium Capital Partners for two student housing schemes in Milan.

The first property, Collegiate Milan North, opened to residents at the start of 2023 and provides 695 beds across a mix of studio apartments and shared rooms. Located in the Precotto district of Milan, the property is near the University of Milano-Bicocca and is fully occupied for the current academic year.

The second scheme is a development located in the Bovisa district, close to two campuses of the Politecnico di Milano. The project is due to deliver 470 beds for the start of the 2025-26 academic year. The developer, Proprium, is a real estate fund manager that spun out from Morgan Stanley in 2013.

Speaking to Real Estate Capital Europe, Stephen Grant, co-founder and chief executive officer of Kinetic Capital and chief executive of Rhize, said the €100 million loan is a combination of investment and construction financing.

“The Italian market typically provides 50-55 percent loan-to-cost and 45-50 percent loan-to-value. Rhize typically provides up to 65-70 percent LTC on development schemes and up to 55-60 percent LTV on operating projects,” he said.

Grant, who prior to Kinetic spent more than four years at student housing provider Global Student Accommodation, most recently as CEO between 2019 and 2020, explained that this is the first loan Rhize has originated outside the UK and represents its largest facility to date.

Kinetic and Kayne Anderson launched Rhize in 2021, as a debt funding platform for the European student housing market. The two firms structured the joint venture as a Luxembourg-domiciled investment vehicle and seeded the platform with $1 billion. Kinetic was launched in July 2020 as a lender dedicated to financing PBSA.

To date, Rhize has built up a PBSA loan book in the UK of between £100 million (€116.64 million) and £150 million, consisting of loans ranging between £30 million to £50 million, he said.

Grant said the PBSA market in Italy is fairly “immature” meaning the lending opportunities are mainly within development finance rather than investment finance, because there is a limited amount of existing supply to refinance.

In November 2023, real estate consultant Savills reported the results of a survey that suggested more than €12 billion will be invested in European PBSA over the next two to five years, led by Spain, Italy, Germany, France and Portugal. It said Spain, Italy and Portugal are markets with limited provision of PBSA, highlighting a significant growth potential amid rising numbers of national and international students.

Grant said Rhize managed to close the financing in late December following a prolonged process of navigating “complicated” Italian regulatory structures.

“It has taken around a year to get this deal across the line. This wasn’t because of reticence from either party but more so that the Italian permit licencing process takes time. Generally, closing transactions in Italy just takes longer than in the UK,” Grant said.