Student residences | Dutch pension fund PGGM featured in second biggest real estate deal of the year

  • PGGM has completed the acquisition of student residence platform Resa, owned by insurer AXA, manager CBRE IM and fund Greystar

  • Resa has 43 residences located in 21 Spanish university towns, which accommodate 11,200 students

New transaction concluded before the holidays. The Dutch pension fund PGGM carried out the second largest real estate transaction of the year in Spain, with the acquisition of the Resa student residence platform to its current owners, the management company CBRE IM, to the investment branch of the insurer AXA and to Greystar, in charge of asset management. According to market sources, the final amount of the operation amounts to 900 million euros.

In February of that same year, the three partners were mandated to launch a competitive process in which several funds competed. Finally, it is the Dutch capital that has been awarded the largest portfolio of student residences in the country. Resa adds 43 buildings in 21 Spanish university towns, three of which are still under construction until 2023 and 2024. In total, it has 11,200 beds. As this is a large volume sale, the National Competition Market Commission must authorize the closing. BBVA, Freshfields Bruckhaus Deringer, KPMG and Savills advised PGGM and Eastdil Secured, CBRE, Garrigues, Deloitte, Arcadis and Longevity to the sellers.

CBRE IM and AXA acquired the portfolio, in 2017, from Azora, Artá ​​Capital, Banca March and Mutua Madrileña. At that time, she had 33 assets. Greystar acted as manager and will continue in the same role following the closing of the transaction. This transaction is equivalent to the total volume of investments in student residences last year. In the first half of this year, the funds allocated more than 500 million euros for the acquisition of this type of asset. Taking into account that, in the rest of the year, new operations will be closed; student accommodation will set a historic record. The fundamentals support this type of investment, since the number of active residences does not serve all students in Spain.

Spain needs student residences

The specialists estimated at 550,000 the number of mobile students in our country, that is, those who change cities to pursue a career and foreigners who visit the country. Over the next 10 years, that number will increase by another 100,000. To this must be added the problem of university residences, operated by religious orders, which offer very poor quality: aging assets, poor management and little investment. These entities linked to the Catholic Church have repeatedly chosen to sell their assets to investment funds.

Owners of this type of property obtain a annual return ranging from 4.5% to 5%, depending on whether they are located in Madrid, Barcelona or in more peripheral cities. Foreign funds are oriented towards large cities, but there is a significant market in university towns such as Salamanca, Valencia, Granada or Malaga. This market is facing a period of consolidation, in which the capital that bet years ago on the construction of these assets will seek to sell them and obtain capital gains. Now Spain’s main owners are the PGGM fund, the joint ventures of EQT-Grupo Moraval and that of TPG-Urbania, the Stoneshield fund with MiCampus, Livensa and the Belgian Xior.

During this year, 30 student residences with more than 9,800 beds will open their doors. Between this year and next, a total of 20,000 new places will be added to the market: Barcelona (5,000), Seville (4,000), Madrid (3,300), Salamanca 2,300, Pamplona (1,300), Granada (1 000) and Málaga (500).

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