Goldman Sachs and the Wellcome Trust are in talks to form a £2bn student accommodation joint venture.
The prospective deal would see the unusual unity of an investment bank and a charitable health and research foundation.
The pair are in discussions to pool their assets in the sector, which total more than 23,000 beds. The ultimate plan for the vehicle is for it to be listed through an initial public offering, most likely towards the end of 2016.
The deal is still at an early stage and there is no certainty that it will complete, with both parties also considering other options for the future of their portfolios.
The student accommodation market has seen a flurry of investment over the past two years as buyers look to build scale and create platform businesses. Already this year £4bn of deals have been transacted in the sector, according to CBRE research.
Goldman’s portfolio is valued in the region of £1.5bn and Wellcome’s close to £500m. The two parties would own a proportionate split in the vehicle of around 75% and 25% respectively.
Wellcome’s iQ platform was built up in a joint venture formed with Quintain in 2007. The 50:50 partners grew the 13-asset business to 5,183 beds by May last year. Wellcome then bought Quintain’s share for £106.4m and took on its debt held against the portfolio. At the time, the assets were valued at £431.9m.
Goldman has steadily built up its portfolio having seized upon opportunities that emerged from the downturn. In 2013 and 2014, the bank bought two portfolios previously owned by the collapsed Opal Group for a total of £600m, which included almost 12,000 beds.
Its most recent substantial purchase was the £500m acquisition of the Westbourne Portfolio from Knightsbridge Student Housing in May, totalling 5,867 beds across 12 assets.
US investor and asset manager Greystar has been a minority co-investor alongside Goldman Sachs in many of its acquisitions thus far. However, whether Greystar is to have any involvement in the management of the prospective joint venture is as yet undetermined.
It is expected that the partners will continue to invest in the business to increase its scale before an eventual exit.
david.hatcher@estatesgazette.com
