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Crosstree Dives Into Student Sector For £350M Fund Bringing In New Investors

The Valentine student accommodation scheme

Opportunistic investor Crosstree Real Estate has made its first foray into the student accommodation sector, for a fund that will look to take advantage of the disruption brought about by COVID-19.

Crosstree has paid about £55M for a recently completed 333-bed student accommodation scheme called The Valentine in Gants Hill in north east London, React news reported. It has bought the scheme from developer Tide Construction, and it will be managed by residential specialist Outpost Management, the new company of former Greystar director Troy Tomasik. 

Student accommodation has been one of the sectors hit hard by the coronavirus pandemic, with occupancy down as some universities move to online learning, and students worried about having to self-isolate in halls.

But Crosstree said its purchase was a vote of confidence in the sector. “The Valentine represents a rare opportunity to acquire an institutional-grade asset at an attractive basis during the current market dislocation,” partner Will Dear told React.

The deal is one of the first undertaken for a fund that marks an evolution in Crosstree’s business. 

The company was set up in 2011 by former Blackstone and Starwood directors Nick Lyle and Sean Arnold, with the backing of Swiss-Italian pharmaceutical billionaire Ernesto Bertarelli. It targets assets in London, with a focus on development and refurbishment projects. It has invested in hotels, offices and retail predominantly. 

But early last year it appointed Lazard to raise capital for a fund bringing together multiple investors for the first time. The Crosstree Real Estate Special Situations Fund raised $116M in January 2019, according to documents filed with the U.S. Securities and Exchange Commission.

That was an anchor commitment from Waypoint, Bertarelli’s investment vehicle. It has subsequently raised £350M from about a dozen investors, mainly super-wealthy North American and European individual investors. 

The Valentine is close to Stratford via public transport, which will become a major university location when UCL and the University of the Arts London open new campuses there in 2022. 

CBRE Global Investors Credit Strategies provided debt for the purchase, and Conduit Real Estate advised on the deal.