Round Hill Capital enters Spanish PBSA sector

Round Hill Capital (RHC) has closed a deal to purchase a 12,800 sq m site for its first PBSA development in Spain. The plot is located in the Aravaca district of Madrid and has a 500-bed student residence project. Construction is planned to begin in 2021 and the development is scheduled to be ready for occupation for the 2023/24 academic year.

The site has full planning permission and is within close proximity of many of Madrid’s leading universities including IESE, ESIC, Francisco de Vitoria and the Complutense University of Madrid. It is also exceptionally well-located with rail and bus links to the city centre just a five-minute walk away.

The deal marks Round Hill Capital’s 23rd PBSA investment in continental Europe, bringing its current portfolio to over 9,590 beds. The company is actively seeking further investments in Spain as it looks to build on its expansive portfolio across the continent, having identified significant supply/demand imbalances in high quality student accommodation in the Spanish market. In the 2018-2019 academic year, there were only 20,693 PBSA beds in Madrid to meet a demand estimated at 114,000*.

The deal provides further evidence of the appetite institutional investors have for European and US accommodation in the current economic climate. RHC believes such assets offer long-term resilience as investments which deliver attractive returns at acceptable risk levels. RHC is raising additional capital to deploy into student accommodation, residential and senior living projects as it looks to capitalise on persisting demographic trends while utilising innovative technology to maximise efficiencies.

The development benefits from a modern design and layout and will provide students with high quality services and amenities rarely found in Spanish student housing, including high velocity Wi-Fi, a year-round events programme, communal study areas, a gym/wellness room, rooftop terrace, swimming pool, a cinema room, laundry, bike storage, car parking, 24-hour security and attractive landscaped outdoor spaces.

Nido Student, the award-winning specialist PBSA brand, will operate the development upon completion. Known for its focus on student wellbeing, sustainability, design and technology, Nido is an established operator for European student accommodation and provides a home, lifestyle and experience which supports students’ success and helps to build real communities that allow residents to thrive. Nido currently operates 28 student residences across Europe with over 7,000 beds, with an additional secured pipeline of 3,000+ beds that will be mobilised in the coming years. The group has a target of 20,000 beds under management by 2025.

Michael Bickford, Founder and CEO at Round Hill Capital, said:

“We are delighted to announce our latest European PBSA investment, further establishing Round Hill’s reputation as the leading PBSA investor across the continent. There is an undersupply of high-quality student accommodation in Madrid and this real estate infrastructure is critical for attracting students to the city who will support its continued development and the attraction of foreign investment. Despite multiple leading universities being located in Madrid, many students struggle to find acceptable accommodation because the sector has been woefully under invested in. We look forward to our new development helping to address this problem, in a vibrant area that benefits from an array of shops, restaurants and bars.

“Although Covid-19 presents short-term challenges, student accommodation is a defensive counter cyclical long-term real estate investment. Previous recessions have shown demand for education remains strong, as students tend to invest more in their education when jobs markets are more competitive. Europe’s universities will always be attractive to international students, who come to the continent to enjoy its unique culture as well as study. Our pipeline in all rental housing sectors is strong, because investors recognise our 18-year track record of successfully investing in, developing and operating residential assets across Europe and the US,” he added.

Russell Petrie, Head of Student Accommodation of Round Hill Capital said:

“This development will be a rare offering for students in Madrid and a flagship asset in Round Hill’s PBSA portfolio. We have designed an energy-efficient, modern building that will benefit from a range of services and amenities few students in the city will have experienced before. We look forward to construction starting and using technology and our experience to drive efficiencies and investment returns. We continue to see strong opportunities to invest in and develop institutional PBSA assets in the European market and beyond, and look forward to announcing new investments in the near future.”

Brian Welsh, CEO of Nido Student, said:

“As Europe’s leading operator of high-quality private student accommodation, we look forward to bringing our wealth of expertise to this new development as we continue to expand the international Nido Student community. Over the past few years, we have continued to develop and refine our strong focus on wellbeing, technology and experience — placing students at the heart of everything we do. Madrid is vastly undersupplied in high-quality purpose-built student accommodation and so we are genuinely excited to bring the renowned Nido Student brand and all it represents to the Spanish capital.”