Corestate Capital enters German student accommodation market

Swiss-based Corestate Capital is taking over public German residential property developer Alta Fides in a €100 million ($156 million) deal.

Corestate already had a 14.2 percent stake, having acquired it in December last year. Now it has increased this investment to 61.3 percent, it said in a statement, and will make a mandatory offer for the company.

The €100 million investment to take over Alta Fides marks the firm’s entry into the student accommodation sector in Germany. It is investing in the company out of its Corestate Residential fund, which closed in May on €490 million.

Ralph Winter, chairman, said Alta Fides was an ideal supplement to the fund’s portfolio. Alta Fides is a project developer of top-end residential property but it also operates a student accommodation property development business under its Campus division.

Winter said the company was the first to move into the sector in Germany. It owns projects in seven university cities and has a pipeline for additional student housing assets.

“Acquiring a qualified majority in Alta Fides is the next logical and consistent step after the fund invested into a minority interest in this company in December 2007 in particular in order to develop the growth potential offered by the student homes asset class for our investors,” he said in a statement. “By acquiring a majority interest in Alta Fides, we can enjoy rapid entry to the market and the associated significant market shares in a fast growing, highly attractive new real estate segment.”

The deal is expected to close in the fourth quarter. The firm is offering €15 per share for the outstanding shares, a 10 percent premium on the weighted average stock market price over the last three months.

Investors in Corestate’s residential fund include Dutch bank ING, UK-based Morley and Australia-based Goodman. Corestate was established in 2006 by Winter, formerly head of real estate for Cerberus in Germany.