- Goldman Sachs and the Wellcome Trust have formed a £2 billion joint venture called Vero Group to invest in student housing in the UK, making it one of the largest players in the sector alongside Unite Group. - A record £6 billion was invested in private UK student accommodation in 2015 as investors seek to take advantage of rising student numbers and a shortage of housing. - Vero Group will initially have a portfolio of 23,500 beds across 25 UK towns, and plans to expand further through development and acquisitions. Goldman Sachs will own 68.4% of the new venture, with Wellcome Trust owning 28%.

1. PRESS CUTTING
Source: Financial Times (Web)
Date: 19 January 2016
Goldman Sachs and Wellcome Trust in student housing tie-up
Goldman Sachs has joined forces with the WellcomeTrust, a British charitablefoundation, in a £2bn
student accommodation jointventure that will become the closest competitor ofthe sector’s pioneer,
Unite Group.
The new venture, Vero Group, is formed as investors pile into private studenthousing to take advantage
of a supply crunch after accommodation failed to keep pace with growth in student numbers.
A record £6bn was invested in private UK student accommodation in 2015,morethan the equivalent
figure for North America, according to data from lawyers Addleshaw Goddard.
The rare alliance ofan investment bank and a charitabletrust combines iQ, owned by the WellcomeTrust,
with Prodigy Living, ownedby Goldman Sachs in tandem with Greystar, a US real estate investor.
Goldman will own 68.4 per cent ofthe new venture,Wellcome 28 per cent and Greystar 3.6 per cent.
Vero Group will initially hold a portfolio of23,500 bedsin 25 towns across the UK — compared with more
than 44,000 for FTSE 250-listed Unite —but has plans to expand. It will consider development
opportunities as well as buying existing assets.
Richard Spencer,managing director at Goldman Sachs, said:“We are committed to building the UK’s
leading student accommodation provider.”
Goldman and Greystar bought theirfirst joint student accommodation assetsin 2013and became one of
the sector’s largestplayers with the purchase ofa £500m portfolio from Knightsbridge Student Housing
in May 2015.
Wellcome, a health research charity that owns £18bn in investment assets, has been involved in the sector
since 2007. It boughtout its iQ joint venture partner Quintain for £106.4m in 2014.
The combined company, which employs about 600 people, will continueto run the iQ and Prodigy brands
at least until the end of2016.
Analysts at Liberum said 25 to 35 per centofthe UK’s student accommodation stock was traded in 2015,
driving up values and prompting investors to take more risk on new developments.
Iliya Blazic, managing director ofVero Group,said:

2. “We’ve seen a lot of transactional activity [in student accommodation] over the past couple ofyears, with big
portfolios changing hands.
“There will be a point in time where that stops for a while, owners will stabilise and start to understand what
they’re operating.
“The investment market has driven the sector for the last couple ofyears, but we may start to see more
consolidation.”
Student numbers have almost doubled since the 1990s, and the government predicts 200,000 more people
will start studying at UK universities by 2020 aftera cap on domestic and EU students was removed last year.
Overseas students and postgraduates in particular have sought to take advantageofthe boom in purpose-
built accommodation, rather than taking the traditional and often cheaper path from university -owned halls
to living in the private rented sector.
Purpose-built units come with perks such as instant WiFi, gyms, security and even —in some ofthe more
upmarket examples —in-house cinemas.
Investors, meanwhile, have been drawn to the potential for rental growth that exceeds inflation. Yields in
2015 ranged from 3.75 percent for primeLondon leases to 9.75 percent for direct lets in so-called secondary
regions, according to Savills, the estate agency.