A BaseStack Living facility in Copenhagen
In an intriguing move reflecting a growing interest in purpose-built student accommodation (PBSA), Macquarie Asset Management has announced plans to acquire and merge two specialized platforms: BaseStack Living and Milestone. By joining forces, they aim to create a robust PBSA platform managing over 12,000 beds across several European countries, including Germany, Italy, Poland, and Denmark. This deal underscores the escalating demand for student housing amidst a competitive real estate landscape.
While the financial specifics of the deal have not been disclosed, BaseStack owner Justin Hamer is expected to remain a significant shareholder and will assume the role of CEO for the newly merged entity. This partnership comes on the heels of a report from Savills indicating that student housing has surpassed multi-family homes as the top investment target in European operational real estate, capturing the attention of institutional investors.
Strategic Vision
Brendan Jones, head of real estate for Macquarie Asset Management in EMEA, articulated the vision behind this merger, describing it as a foundational step in building a specialized platform that can comprehensively own, develop, and manage PBSA projects across Europe. The anticipated growth is not just about flipping properties but aims to address the pressing need for affordable housing solutions tailored for students. “We expect to scale the offering across major European markets, alleviating pressure on residential rental markets,” Jones remarked.
The Growth of PBSA in Europe
The momentum behind this merger reflects a broader market trend, according to industry veteran Justin Hamer. Previously co-founder of Basecamp Student, a platform sold for €1 billion ($1.2 billion) to Xior Student Housing in 2022, Hamer recognizes the growing recognition of PBSA in Europe. He highlights that there exists a significant demand-supply gap, estimating that there is currently less than one bed available for every ten full-time students in major cities across the continent.
This undersupply has positioned PBSA as a lucrative opportunity for investment, particularly as more institutional investors are looking to enter this space. A recent Savills survey reinforced this trend, showing that 62% of investors with nearly €720 billion in real estate assets consider PBSA a top priority, indicating a stable commitment to this asset type even as multi-family housing interest wanes.
Macquarie’s Broader Strategy
Macquarie Asset Management’s dive into the PBSA market aligns with its broader strategy of making targeted investments in specialized operators to tap into hard-to-access sectors. The firm is involved in a diverse portfolio, including backing Unified Industrial’s development plans across Asia, as well as supporting Local Residential in Australia, which aims to bolster the build-to-rent sector with over A$1.34 billion in asset pipeline.
Anticipated Impact on Student Housing
The merger’s impact goes beyond mere financials; it also signifies a shift in how student housing is perceived and managed. As Hamer emphasized, the partnership is dedicated to not only expanding the footprint of PBSA but also advancing the quality of housing that students receive. “We are thrilled to partner with Macquarie Asset Management to buy and build professionally managed student housing,’ he stated, setting the expectation for high standards in accommodation and management practices.
Market Potential and Future Directions
With both companies poised to leverage their expertise, the newly formed platform is expected to drive significant innovation and scalability in the PBSA arena. As the PBSA market remains in its nascent stages in Europe, the partnership aims to not only meet the current supply challenges but also explore new opportunities for development in a market ripe for disruption.
Brendan Jones, head of real estate in EMEA at Macquarie Asset Management
Conclusion
As the landscape of real estate continually evolves, the merger of BaseStack and Milestone under the aegis of Macquarie Asset Management is a vivid illustration of how student housing is becoming a focal point for investment. The move not only enriches the PBSA sector but also signals a new direction for tackling housing challenges faced by students across Europe.