Round Hill Capital is engaging with investors with a view to raising as much as €500 million to export its high-end student accommodation business Nido into Europe.
The London-based real estate investment management firm acquired the business alongside a portfolio of three London assets from New York private equity real estate giant The Blackstone Group in 2012 in a deal valued at £415 million (€522 million; $591 million).
Last year, Round Hill sold the London assets to Charleston-based real estate firm Greystar Real Estate Partners for £600 million. Since then, the firm has been exploring ways to expand the Nido brand in both the UK and in Europe.
PERE understands that, earlier this quarter, the firm appointed placement agent Park Hill with a view to raising as much as €500 million with which to capitalize the forward-purchase or repositioning of student accommodation.
The vehicle type used for the strategy is currently subject of discussions between Round Hill and prospective investors. It is thought either a fund or a joint venture club will ultimately be formed and that at least one large institutional investor is close to committing to a first capital closing.
Neither Round Hill nor Park Hill would comment, but PERE understands that a two-pronged strategy is being presented to prospective investors.
The first is to acquire real estate that can be used as student housing in the relatively more mature markets of the UK, Ireland, Spain and the Netherlands. The second is subject to evaluation and is more opportunistic in that it involves buying in undersupplied, yet less proven markets such as Italy.
The firm is keen to acquire properties in clusters, aiming for between 1,200 beds to 1,500 beds per location.
From investments made via this strategy, the firm is aiming to generate returns of 15 percent net to investors, akin to a value-added profile.
Since buying Nido from Blackstone, Round Hill has become one of Europe’s more prominent student accommodation providers. Last year, it is understood to have traded about €1 billion of property in the asset class and sources predict it will buy and sell close to that value this year.
Also a big investor in other forms of residential property, Round Hill has about €3.5 billion of assets under management in the UK and Europe.