Creating and adding value for investors

Jul 06, 2018
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Atelier Property Group has turned purpose-built student accommodation into a worthwhile and lucrative investment.

Founded in 2011, the Atelier Property Group prides itself on delivering a quality property asset management service based on its deep understanding of the student accommodation markets in the UK and Ireland. To date, the company has acted as asset manager and property manager for over 2,000 purpose-built student beds across six cities in the UK and Ireland, with an aggregate value of £1.5 billion. More recently, Atelier has transferred a pipeline of 1,325 student accommodation beds in Ireland worth in excess of €200 million.

“We are Ireland’s only independent student accommodation operator. We couple this with our development expertise to offer a full end-to-end service to clients who include private and institutional investors, educational institutions, and existing property owners”, explains Atelier Ireland Chief Operating Officer, Conor MacGowan.

The company has its origins in the UK, where it started life developing small purpose-built student accommodation buildings. “The business grew so quickly that we started working with investors and then we saw the opportunity to enter the Irish market,” MacGowan adds. “Student accommodation has changed greatly over the years. The days when students would rent a room in a house or share small apartments are gone. They want shared living with social spaces and top quality amenities and facilities. We are experts in providing attractive accommodation to students while, at the same time, optimising returns for investors.”

Currently, Atelier manages properties in Dublin, Cork and Galway in addition to its properties in the UK. It is also actively seeking opportunities both within the major urban areas and in regional Ireland. The company has also been appointed as development manager to UK-based student accommodation specialist investment fund Ziggurat, which is developing a number of properties around the country including one at Western Road Cork, three on the north-side of Dublin close to the DIT Grangegorman campus, and another in Galway.

In addition to this, Atelier specialises in the recovery of distressed assets, with two stand-out developments in Dublin already to their name. The first is the Montrose Hotel which has been redeveloped into one of the finest student accommodation properties in the country. “We bought that out of NAMA and secured planning to convert it into student accommodation,” says MacGowan.

That was by no means as straightforward as it sounds. There were a number of particular planning challenges to overcome. “The hotel was located in a mature residential area and a lot of people weren’t very comfortable with having student accommodation on their doorstep,” MacGowan says. “We had 50 observations, four objections and, in the end, we resolved them all. The project went ahead on schedule and is now operating very successfully for the students, the investors, and the local community.”

Another high-profile distressed property was the student accommodation at Marino Institute of Education in Dublin. This is co-located on the Institute’s campus and was developed by a private concern which went into receivership as a result of the downturn. Goldman Sachs, through Arrow, their appointed asset manager in Ireland, approached Atelier to assist.

“We carried out a detailed review, including a compliance check, of the property and recommended remedial works to bring it up to standard and maximise the value at sale. It was subsequently purchased by the Marino Institute of Education and they have retained us to operate the property on their behalf.”

According to MacGowan, these are examples of the development and operations divisions of the firm working together to maximise value. “Our development team has vast experience taking projects from feasibility stage right through planning, financing, construction, fit out and completion. Our operations team then takes over and looks after everything including facilities management, lettings, customer service and satisfaction.”

Both teams play key roles in maximising value and return on investment. The development team ensures the projects are delivered on time and within budget to the highest possible standards while the operations team is responsible for managing the student experience and delivering the return to investors.

“Our operations teams are on-site to ensure the students get the best possible experience and their parents get value for money and peace of mind,” McGowan continues. “They are also responsible for lettings throughout the year. The students are on short-term leases for nine months of the year and that leaves three months of the summer to be let out – if your properties are not let during the summer periods, you can’t make a return on the investment.”

Part of the skill that Atelier brings to the equation is in achieving the right rental return. MacGowan explains that this is not simply a question of seeking the highest possible rent. “It is about charging the right rent that the market will bear. At the moment, we are in a market where supply and demand are out of kilter and there could be a temptation to take advantage of that by charging extortionate rents. But, that would be counter-productive in the long-run and do lasting damage to the reputations of those involved. We don’t apologise for charging higher rents but we ensure they represent good value. We also bring our expertise to bear in letting out the properties during the summer periods.”

In these circumstances, it is hardly surprising that leading international investment firms such as Carlyle Capital, Lonestar, Goldman Sachs and Oaktree as well as local advisors Arrow, FLM, Hudson Advisors, Grant Thornton and Duff and Phelps, have approached Atelier to develop and operate properties on their behalf. 

Atelier is also offering to lease buildings and operate them on behalf of the owners. “There were a lot of Section 50 apartments built some years ago that were bought by individual investors,” MacGowan points out. “Many of these are now a bit tired and in need of a refresh. We offer the owners an operational lease arrangement whereby we take on the refurbishment, redevelopment and operation which leads to increased returns to investors. That offer is gaining real traction in the market right now.”

To learn more about Atelier’s track record of creating and adding value to student accommodation and delivering excellent and sustainable returns on investment, visit atelierproperty.com, email info@atelierproperty.com or call +353 1 9060828.