Round Hill sells Nido student housing portfolio in £600m deal

A 2,375-bed portfolio of flats in London has become the latest collection of student accommodation to change hands, in a flurry of investment activity.

Round Hill Capital has sold the Nido portfolio - consisting of three blocks in Notting Hill, King's Cross and Spitalfields - to Greystar Real Estate Partners for £600m, according to sources familiar with the deal.

Round Hill bought the properties from Blackstone for £415m in 2012.

The blocks of flats are targeted at the top end of the burgeoning student market, including gyms, fitness rooms, bars and cinemas.

The deal is the latest in a series of transactions, highlighting how student housing has become one of the fastest-growing property sectors in the UK. Investment in student accommodation hit £2.4bn in 2014, up from £2.2bn in the previous year, according to CBRE.

The government's decision in late 2013 to scrap a cap on the number of students that British universities can admit has been one of the key drivers of investors' interest in the sector. The removal of the cap, which comes into effect this autumn, is expected to fuel the growth in the number of foreign students studying at UK institutions.

There were 435,500 international students in the UK in 2013/14 according to figures from Higher Education Statistics Agency, up 2.4 per cent year on year.

Overseas students tend to favour purpose-built, professionally-run accommodation, and often come from wealthy backgrounds, so they can afford to pay for high-quality housing.

Last week one of the sector's biggest transactions to date was signed: The Canada Pension Plan Investment Board paid £1.1bn for the 16,700-room Liberty Living portfolio of student housing in a deal that made it the UK's third-largest student landlord.

Liberty Living's previous owner, the Brandeaux Student Accommodation Fund, had abandoned a plan to float the portfolio last year.

Russian investment fund LetterOne recently paid the Carlyle Group £532m for the 2,170-unit landlord Pure Student Living, and has also acquired two groups of flats totalling more than 1,000 bedspaces from McLaren Property.

Student landlord Empiric, which went public last spring, is now seeking to raise up to £75m in further funding for additional acquisitions, after a successful fundraising round last autumn.

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