Q Investment Partners and Soilbuild are looking for additional international partners to come on board their joint venture for a £200m UK purpose-built student accommodation build-to-core platform.
The joint venture, announced yesterday, is seeking to syndicate up to 45% equity with strategic partners.
Peter Young, chief executive and co-founder of QIP (pictured), told EG that the jv is looking for an additional equity partner for a “three-way club syndicate”.
QIP already manages a £150m portfolio of PBSA projects in the UK. Young said that with Soilbuild and the additional partner, the company would like to more than double its presence in the UK sector.
EG: QIP has been active in the UK PBSA space by itself for a number of years. Why did you bring in Soilbuild as a partner now?
Young: We feel the sector still has a lot of opportunities, and we want to work with capital that understands the sector and partners with us to scale up in size. We are starting with £200m and we have the capacity to look at doubling that, potentially more. It is subject to the opportunities we find.
One of the important aspects for QIP is having a capital partner that will back us, and bringing in capital partners that will be accretive. The partnerships that we want to bring into our platform will ideally give us more than capital that knows the sector and knows the opportunities – we will also be able to build a platform with them. And that is what the Soilbuild opportunity provided us.
EG: What kind of third partner are you looking for?
Young: We are looking for a capital partner that will syndicate a large part of the equity in a three-way club syndicate. We are looking for a partner that is very focused on investing in the sector. Someone that understands the opportunities and that also brings the ambition to create something bigger than a £400m platform. True vertical integration on a practical level [means that] you need to be able to manage money, and you need to be able to execute the opportunities via planning and development.
We plan to build a sizeable operational business, a sizeable portfolio that enables investors to invest in that end product or build-to-core. Within that framework, we are looking for a serious player in student housing that could scale up the platform through their own immediate strategy. Ultimately, it is backing through capital and energy, and expertise as well.
EG: Are you looking for UK PBSA partners or international partners?
Young: We are looking at both, but the international space is particularly exciting to us. There is particular interest in international partners because we see some strength and drivers in them. But UK partners bring that immediacy.
From international capital we see the desire to build out a platform, and the value proposition that we see and how we bring value to Soilbuild and the potential international partner is our execution and our deal-sourcing capability.
I think international investors and UK investors in many respects look at things similarly. But I think international investors have certain lenses that are a little bit different.
EG: What is your investment strategy for the PBSA venture?
Young: Our main strategy is build-to-core, finding a way to build and [looking to] forward-fund with developers and look at land-banking sites with a jv partner to take through development. We could work with a partner to land-bank a site and take it through planning in partnership. We could do any of those strategies independently as well.
EG: Will you be looking at taking sites through the planning process?
Young: We would look at sites without planning – taking a site through the planning process is something we have done before and would look to do again. We find the risk-adjusted aspects where we ultimately decide we are happy to do that to be quite attractive, and that is one competitive route for us to be able to secure opportunities. Many institutional investors do not have that appetite. But we have the execution capability.
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