Colonial enters the student residence business

BarcelonaThe listed socimi Colonial, which until now only dedicated itself to the office building market, has entered the student residence market with the creation of a joint venture with the British group Vita, which will begin with a portfolio of three assets located in Madrid valued at 1 billion euros, the company reported this Wednesday. In a first phase, Vita Group contributes to the joint venture Vita Student Oria South, which opened its doors this September; Oria North will join in 2027, and Santa Hortensia, one of the projects in Colonial SFL's urban transformation plan, will be added after the delivery of the assets, scheduled for 2028.

"The integration of the three assets into a single platform generates greater critical mass and a more solid commercial position than each asset could achieve individually, and also allows Colonial SFL to complement its portfolio with a new asset class," the Spanish company explains in a statement.

The socimi argues that the creation of this platform improves the previously expected profitability of Santa Hortensia, of approximately 10%, above the initial investment forecasts, and a yield on cost greater than 6%, anticipating the realization of value by generating income immediately. The progressive contribution of these three residences to the joint venture will allow for the addition of 92,000 square meters and 2,200 beds, although the platform will also focus on flexible housing (flex living).

The company argues that the student accommodation sector has "solid fundamentals" throughout Europe, supported by the growth in student demand and a structural supply shortage. In this context, Spain is the European country with the highest demand among international students, and Madrid is the most requested city in Spain, with only 8 beds offered for every 100 students.

Financial discipline

"It is important to highlight that we are doing this while maintaining our financial discipline, without capex –capital expenditure– of additional development planned for Santa Hortensia. Furthermore, the platform provides us with significant flexibility to continue growing and, over time, offers the possibility of incorporating additional institutional capital," points out the CEO of Colonial SFL, Pere Viñolas, in the statement.

For his part, the CEO of Vita Group, Mark Stott, emphasizes that this transaction represents "a great long-term opportunity in European capitals and major university hubs," where the structural shortage of supply and the evolution of expectations surrounding urban living are driving the demand for high-quality, professionally managed spaces.