Carlyle Group, Generation Estates Form Joint Venture In UK

(Reuters) – The Carlyle Group [CYL.UL] is stepping up its drive into Europe’s fast-growing student housing sector after forming its first UK development joint venture, with a special focus on London’s under-supplied market.

The global private equity firm has teamed up with student accommodation operator Generation Estates Limited to develop four schemes in London, with capacity for about 1,850 beds and an estimated value of about 350 million pounds ($548 million).

“We have been aware of the attraction of student accommodation for some time, given the strong fundamentals of the market, particularly the ongoing supply/demand imbalance in the UK,” Robert Hodges, Managing Director, Carlyle European Real Estate, said in a statement.

The new joint venture comes about a year after Carlyle’s entry into the student accommodation market in the Netherlands last year. It is also considering a similar venture in Paris.

Carlyle will invest through its third European real estate fund, CEREP III, which raised 2.2 billion euros in June 2008.

The partners have acquired a freehold site in Islington, North London with planning permission for a 400-bed, 10,800 square metre student housing scheme with about 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 estimates there are more than 260,000 full-time students in London, with only enough purpose built accommodation for about 16 percent of these.

This demand has resulted in solid rental growth, which was 10 percent in 2009 and about 7 percent as a longer term average, the firm said.

GEL, which is an experienced developer and operator of student accommodation, will be responsible for the ongoing operation of the completed developments.
(Reporting by Sinead Cruise; Editing by Andrew Macdonald)
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