LJ Group, Cresco Capital Group to Develop 552-Unit Student Housing Community in Berlin
- Jul 22, 2014
Berlin—The LJ Group recently announced it has committed a total of €100 million of equity (about $135 million) to Cresco Capital Group’s German student housing venture, Cresco Urban Yurt. The two companies have partnered to develop and invest in student housing in Germany’s important university cities. On July 17, the partnership announced its first acquisition, a large landmark building in Berlin’s Frankfurter Tor area.
The building is located at Frankfurter Tor 8a. It stands six stories high and has about 242,000 square feet of space. According to property-magazine.de, Cresco purchased the landmark building several months ago, at auction. It competed against 21 other bidders and won with a bid of €15.75 million (about $21.24 million). The Institute for Federal Real Estate (In German: Bundesanstalt für Immobilienaufgaben or BImA), a German government agency that provides federal government entities with real estate services, was the seller. BImA set the building’s value at €10.3 million(about $13.9 million).
Cresco Urban Yurt now plans to invest more than €60 million (about $81 million) and redevelop the property. It will turn it into a student housing community with around 552 apartments and ground floor and basement retail units. Property-magazine.de reports that construction is scheduled to start in the first quarter of 2015, if everything goes according to plan. The project is expected to be completed in the third quarter of 2016.
Alexander Bürk, founder of the Cresco Capital Group, and Daniel Schuldig, a former senior Private Equity Executive with extensive real estate investment experience, are the leaders of the new student housing venture.
“The acquisition of the Frankfurter Tor property exemplifies our focus on large redevelopment projects in prime locations. We secured planning for the property in a short space of time by working closely with the local planning authorities, providing a strong concept which will revitalize the property by integrating it into the local community,” Bürk says.
“We are building a best-in-class student housing platform delivering attractive dividend yields and strong downside protection for our investors. We have an attractive deal pipeline in place and aim for market leadership,” Schuldig adds.
This is just the beginning for the newly formed partnership. The LJ Group revealed that more acquisitions will be announced in Q3 2014. And Cresco Urban Yurt also plans to develop other urban residential concepts.
“The team behind Cresco Urban Yurt has an excellent track record in the German real estate development market and we are very excited to work with them and encouraged by the very evident opportunities presented by the student housing market in Germany,” Andrew Williams, CEO of LJ Group, says.