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Kinetic Capital, Kayne Anderson launch European PBSA debt venture

The JV marks Kayne Anderson’s first foray into the European student housing market.

Kinetic Capital, a UK-based specialist lender in the purpose-built student accommodation sector, and Los Angeles-based Kayne Anderson Real Estate have joined forces to launch Rhize Capital, a debt platform focused on the European student housing market.

The launch comes as Kinetic sees a gap in the market. The firm also wants to expand geographically and in terms of loan size, CEO Steve Grant told affiliate title Real Estate Capital Europe.

“We have launched Rhize because we saw a gap in the market and material demand for a specialist student housing debt provider in the UK and Europe more broadly,” Grant said. “We have [also] been looking to expand our presence in the market and found an experienced and like-minded partner in Kayne Anderson Real Estate.”

Kayne Anderson will bring its expertise in the student housing sector and experience as a lender, Grant added.

Tailored toward PBSA owners, developers and operators in Europe, the venture aims to deploy an initial $1 billion to the sector over the next two years and will have capacity to make individual loans of more than £100 million.

Rhize will benefit from Kayne Anderson Real Estate’s operator-oriented platform, its sourcing network and strong lending relationships.

Al Rabil, CEO and co-founder of Kayne Anderson Real Estate, said that it was important for the firm to find a best-in-class partner for its first move into the European market.

The new platform will also allow Kinetic to expand its product set to include investment and stabilisation loans as well as a broader range of development finance solutions. It will operate alongside Kinetic’s existing UK-focused investment programme.

“The aim is to become the funding partner of choice for a range of high-quality and experienced providers in the PBSA and related living sector, operating across a range of different loan types, sizes and geographies,” said Grant. He added that both parties would provide capital and expertise.

Kinetic’s principal focus is the PBSA market across the UK and other major markets in Europe, although it has started looking at adjacent sectors with similar characteristics, such as the burgeoning build-to-rent sector.

“We have a list of target markets and cities within those markets,” said Grant, adding that each opportunity would be assessed individually, underwriting based on the pandemic-linked recovery picture and strong market fundamentals.

Although Kinetic continues to have concerns regarding the pandemic, Grant also sees grounds for optimism.

“There is still some obvious concern about the pandemic and the impact in the short to medium term on geographical mobility and occupancy levels,” he said. “[Another] area of concern is around development cost inflation and challenging development supply chains, [but] experienced developers and operators [will] recognise that the fundamentals have never looked stronger in most markets and are willing to look beyond these shorter-term challenges.”