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Carlyle enters the UK student accommodation market

Private equity firm The Carlyle Group has entered the UK student housing market following the acquisition of a site in Highbury & Islington in London, and the formation of a joint venture agreement with Generation Estates. 

 

Carlyle and Generation Estates are also progressing schemes on a further three sites in London which are to be acquired, providing the group with an initial portfolio with capacity for circa 1,850 beds at a total value of around GBP350m. 

Carlyle and Generation Estates also hope to work closely with London Universities and other private sector and overseas educational providers to fulfil their specific requirements.
 
Carlyle’s move into the London market follows its announcement of a student accommodation development programme and investment called City Living in the Netherlands in October 2009. It is also considering a similar venture in Paris. 

Carlyle will invest through its third European real estate fund Cerep III, which raised EUR2.2bn in June 2008.
 
The Isledon Road site is a 0.9 acre freehold, former industrial property located adjacent to Finsbury Park Underground station and bus terminus in Islington, North London. It has planning permission for a 400 bed, 10,800 square metre student housing scheme with approximately 1,433 square metres of commercial space at basement and ground floor level. Demolition is due to start next month enabling completion of the scheme in time for the 2012 academic year. 
 
Carlyle/Generation Estates has agreed to acquire three further sites, subject to planning permissions which are expected to be received in Q1 2011, with construction starting as soon as possible thereafter. It is intended that all of these sites will become operational by September 2013, providing a total of 1,850 beds.
 
Carlyle intends to build a business with Generation Estates of at least 4,000 beds in London, including the initial pipeline of schemes.
 
Generation Estates will be responsible for the ongoing operation of the completed developments.
 
Robert Hodges, managing director, Carlyle European Real Estate, says: “We have been aware of the attraction of student accommodation for some time, given the strong fundaments of the market, particularly the ongoing supply/demand imbalance in the UK and the new joint venture follows our entry into the student accommodation market in the Benelux region in October last year. The Isledon Road site fulfils our investment criteria of being well located near to both a number of universities and transport connections, in an area that has a strong supply/demand imbalance and will provide well designed student accommodation.”
 
Alan Artus, director of Generation Estates, adds: “Through our joint venture with Carlyle, we can work from a well financed position to provide high quality new product that will meet some of the significant demand in London for purpose built student accommodation. We will continue to work closely with the relevant local authorities through the planning process and hope to work together with local universities to meet their individual requirements. We are now actively seeking to grow our business with Carlyle by identifying and acquiring well located sites in Central London in order to create a sizeable operational platform.”

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