Round Hill Capital, the London-based a real estate and energy investment management firm, has sold its Nido London student accommodation portfolio to Charleston-based real estate firm Greystar Real Estate Partners for £600 million (€842 million; $903 million).
Round Hill originally bought the portfolio from The Blackstone Group in 2012 for £415 million, and has thus seen the value of the portfolio rise by 46 percent. The equity investment by Round Hill was supported by £266 million of senior debt from M&G Investments, the fund management arm of insurer Prudential, and £80 million of mezzanine finance from Och-Ziff Capital Management.
The portfolio comprises three premium student housing assets in London’s King’s Cross, Notting Hill and Spitalfields with a total 2,375 beds, containing a mixture of cluster flats and large studio apartments. The portfolio includes communal areas, such as dining facilities, gyms, cinema and karaoke rooms, bars and dedicated study areas.
Nido London was built from scratch by Blackstone, which walked away with a profit of approximately £100 million for a number of the firm’s Blackstone Real Estate Partners (BREP) global opportunity real estate funds. The New York private equity real estate giant originally engaged with a London university with a view to leasing the portfolio to campuses but ultimately chose instead to create an operating business and rent out the 2,526 beds Nido had at the time directly.
“Round Hill identified student housing as an institutional investment grade opportunity well before other investors in the market and this sale underlines our strategy to invest in high quality portfolios and exploit first mover advantages,” commented Michael Bickford, founder and chief executive of Round Hill.
“We still see significant value in the sector, both in the UK and Europe, and will continue to invest in quality assets like these which we can reposition for higher and more stable operating profit and then sell to core investors looking for long term stable income.”