On 24 May 2021, the fund EQT Exeter and the developer Grupo Moraval created a joint venture to build a joint platform for student residences, with an estimated investment of more than 500 million euros.
13 months later, that joint venture has already closed a pipeline of 4,460 beds. “We have been able to secure that size and that volume. We have grown a lot, but our intention is to continue expanding the portfolio in the coming years”, explains Carlos Molero, Managing Director of EQT Exeter, in an interview with Brainsre.news.
Molero recounts the fund’s interest in the student accommodation segment: “Two years ago, we identified this asset class as a thematic investment, since it is proven to be resilient, completely uncoordinated with financial cycles and which we have been searching for since we launched our Real Estate arm”.
The joint venture’s strategy is to analyse and select each opportunity, one by one. “The JV has generated a pipeline in very central locations, which are surrounded by amenities and where the acquisition price of the locations has been very competitive,” says Álvaro Soto de Scals, CEO of the Moraval Group.
EQT and Moraval have not set a limit for their joint venture. “The intention is to expand as much as possible, whilst remaining selective in terms of locations. We won’t buy just anything. We will move forward based on the opportunities that we identify in the market and that fit our criteria. Hopefully, we will be able to handle much more volume“, explains the Managing Director of EQT Exeter. Meanwhile, the CEO of Moraval adds: “We are not obsessed with a number, but with delivering an excellent service for students and managing a viable business. We try to make our residences added value assets compared to the competition. We are not obsessed with volume for the sake of volume”.
Nodis Sevilla, the largest hall of residence in Spain
In the next few weeks, EQT and Moraval will inaugurate the largest hall of residence in Spain and the first owned by the joint venture to become operational, in Sevilla. The asset has 1,100 rooms for students and features energy-saving technology as well as technology-enabled facilities. Nodis Sevilla houses a swimming pool, roof terrace, gym and dining room and will begin to receive students from September of this year.
This property will be operated by Nodis, the hall of residence manager owned by the Moraval Group.
In parallel, EQT and Moraval have 3,360 beds under development in Málaga, Madrid, Barcelona, Sevilla, Granada, Pamplona and Valencia; they will all enter service before 2026. The careful selection of the plots of land will allow Nodis to offer its accommodation at competitive prices.
In terms of future locations, Berta Guillamón, Director General of Nodis, says: “We focus on those cities that appeal to us in terms of their fundamentals: cities with an attractive number of students; with an imbalance between supply and demand when it comes to student accommodation; and where we see that we can contribute to a better student experience with our residences. In cities like Madrid and Barcelona, we need a professional offer and there, we have a greater focus and concentration; but we do not rule out other cities such as Granada and Valencia, as long as we can find a good enough location to convince us because it is attractive for students, a good distance from and well connected to the university and that is surrounded by good amenities and entertainment offerings.
Student residences, a booming sector
Spain has 106,000 beds for students, 80% in modern halls of residences (residencias) and 20% in traditional residences with moral guidance (colegios mayores), according to the latest report on the living sector by the real estate consultant CBRE. That figure is estimated to grow to 114,000 by the end of 2022. Approximately 63% of the supply is obsolete or in need of a facelift.
All of this accommodation is the total supply for more than 1.6 million students nationwide. In Spain, 6% of students are international and so those students alone occupy 96,000 beds. Additionally, 22% of the total, more than 350,000 students, need to travel to study, which represents a significant excess demand for the existing supply.
Investment in student halls of residence accounts for more than 20% of the total registered by the living sector. In 2021, more than 667 million euros were transacted and, in the first quarter of 2022, operations worth more than 124 million euros were closed. The profitability rate in Madrid and Barcelona amounts to 4.5% and in secondary cities can exceed 5%.
“Student residences will continue to attract strong interest from investors due to their high cash generation capacity, their stable and countercyclical profile, and the existing gap in the market between supply and demand”, says Carlos de la Torre, Director of Student Halls of Residence at CBRE Spain.
Read the original article in Spanish.
