Nido House View Issue 8

HOUSE VIEW Market Outlook, UK & Europe | issue 8 | December 2023

Introduction

Forward

Suraiya Comunello CMO, Nido This is the eighth edition of Nido’s House View on the European residential-for-rent sector.

Throughout 2023 we have navigated further macro-economic challenges that emerged post-pandemic: rising interest rates, high inflation, increasing demand for housing in most European economies putting pressure on supply both of residential and purpose-built student accommodation. While three years have passed since the first Covid-19 lockdowns, the changes it created in how we live, shop and work are still impacting the real estate sector today.

Drawing on Nido’s data, expertise and experience, our House View series is a snapshot of investment, operations and development within European residential-for-rent with a focus on our key markets: UK, Ireland, Spain, Portugal, Denmark and the Netherlands.

Looking at the European rental markets broadly, we have seen a resilience of demand throughout the year, especially for the type of quality rental product that we manage, where we bring all costs under one monthly payment. High interest rates will make home ownership much more difficult in the long-term for many people, coupled with a slump in housebuilding rates in countries such as Germany and the UK, which will only increase demand for high quality renting.

In this edition we summarise trends for 2023 and Nido’s activity and achievements in the market. We also outline our projections for 2024.

Our spotlight is on our Nido Portugal residences which we acquired from Smart Studios in Lisbon and Oporto, interviewing Juliana Petrikova, Head of European Operations at Nido to discuss the delivery challenges involved and the services we have implemented to create communities which aim to enhance resident wellbeing.

Contents

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1. Forward: Suraiya Comunello, CMO, Nido

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2. 2023 for Nido: Focus on mobilisations, expansion and service

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3. 2024 Outlook

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4. Portfolio spotlight: Nido Portugal

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HOUSE VIEW – Market Outlook, UK & Europe | December 2023

The residential and coliving residences we manage in Denmark and Portugal are modelled on creating communities for multiple age groups, integrating technology and lessons in sustainability in to our designs and services. On the other side of the market, student accommodation has seen some of the most dramatic adaptations to resident requirements in the broader living sector. We are now rightly expected to offer sustainable and wellbeingoriented spaces, create a sense of community, a safe place for students to share their thoughts and feelings, and play a larger role in improving students’ university experience.

From the way we design our buildings, to the events and engagement programmes we create throughout the academic year, we are more focused on students’ wellbeing and our impact on their everyday lives than we ever have been. However, this comes on the backdrop of an increase in the number of students in Europe at the same time as there is a shortage of developments being planned, meaning students have no choice but to compete for good quality PBSA homes or resort to an already overheated private rental market. Despite 65% of investors looking to target the PBSA sector in Europe, according to latest Savills research, students will still face a shortage of quality accommodation in the near term.

The benefits of PBSA compared to the private rental markets in all European countries are clear - we bring all amenities, utilities and services under one roof, making it easier for students, and particularly those from overseas, to adapt to their new home, while we create diverse student communities in the same building. The feedback is resoundingly positive, with the latest GSLI (Global Student Living Index) survey for 2023 showing that more students living in our buildings feel that their accommodation is looking after their wellbeing than those who feel that their university cares about their wellbeing.

We are looking after the next generation of professionals and knowledge workers, so our responsibility is reflected in the design and quality of our buildings and the way we manage the living experience. The positive feedback from students is also reflected through the level of occupancy and lease-up rates. This academic year, in most markets, more than two thirds of our rooms were leased by the previous April, reaching full occupancy by July, whereas in previous years (due to the impact of Covid), a small percentage would still be available for students to book at the start of term.

This is key for PBSA’s evolution as an institutional asset class. While market conditions are harsh across European real estate which is still, and expects to continue facing higher debt costs, the environment looks favourable for student accommodation’s evolution, where we constantly raise the standards in ESG, technology integration, design, and wellbeing.

HOUSE VIEW – Market Outlook, UK & Europe | December 2023

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2023 FOR NIDO: FOCUS ON MOBILISATIONS, EXPANSION AND SERVICE Since the beginning of 2023 we have focussed on mobilising our latest developments as well as integrating new acquisitions under the Nido brand. Following a busy 2022 when we entered new markets and opened new buildings, 2023 is a year where we have also been dedicating our time to raising the bar in ESG, technology use, wellbeing-oriented design and responding to customer feedback to improve our residents’ experience and the service offer tailored to our assets.

Coliving In March we announced the integration of Smart Studios, a coliving portfolio of c 2,000 beds acquired by the RHESA JV between Round Hill Capital and CPP Investments, under the Nido brand. Having spent a significant amount of time since acquisition incorporating Smart Studios’ local expertise into our operating model, the buildings, located in Lisbon and Oporto, are now part of the Nido brand.

Nido’s approach to coliving is to work closely with developers and partners to grasp the underlying goals of coliving spaces, and be able to adapt and cater to the diverse demands of the various demographic groups living in the residences.

Student accommodation In September we opened Nido Aravaca, our latest student accommodation in Madrid, where student numbers have increased by 14% since 2015 in a country where student accommodation hasn’t kept up with demand, with less than 110,000 student beds on offer for over 800,000 students. Nido Aravaca will be home to more than 500 students benefitting from easy access to universities, but also from Nido’s round the clock management team, biophilic design throughout the amenities, study and coworking spaces, games rooms and lounges, and a rooftop terrace with jacuzzis and panoramic views of the city.

In Maastricht, we are mobilising Nido Randwyck which has 506 beds and offers a variety of study and social spaces, gym, lounges, and landscaped gardens. Nido Randwyck is a collection of classic, standard and premium studios which have all been booked out ahead of its January opening, a reflection of the strong demand patterns in the Netherlands for quality, wellbeingfocussed student accommodation.

In November, Nido also announced a new partnership with Primus and H.I.G Capital on two student accommodation schemes in Leeds and Lancaster, continuing our work in the UK and strengthening our portfolio of student housing. The new mandates will see us working with the developers in designing and mobilising close to 800 student beds in university cities that are hugely undersupplied and where students face a severe lack of quality and reliable choices.

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HOUSE VIEW – Market Outlook, UK & Europe | December 2023

HOUSE VIEW – Market Outlook, UK & Europe | December 20234

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Wellbeing Throughout 2023 we have continued our partnership with clinical psychologist Dr Tara Quinn-Cirillo, developing and localising our wellbeing hub and offering residents virtual sessions on wellbeing, tackling topics that we know from direct feedback matter most to our residents: managing finances, managing stress and anxiety, handling exam stress, making new friends and adapting to life in a new city.

We are leveraging sustainable interior design, virtual and in-person wellbeing support via our partners, and our wellbeing focused experiential programme to make a positive impact on our residents’ living experience.

In 2023 we started a new partnership with The School of Life, an organisation focused on therapeutic services and psychological education, democratising access to key skills, tools and techniques that enable people to learn, change and grow. Through our partnership, we are providing all residences with a set of The School of Life books and cards and have secured a discount for our residents to The School of Life’s resources, such as books, products, articles, coaching, workshop and talks.

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HOUSE VIEW – Market Outlook, UK & Europe | December 2023

Integrating technology with sustainability In our Danish asset and two of our Irish assets, we have started working with Utopi, an awardwinning proptech, which measures the energy consumption of the building and individual rooms, helping us to use the date gathered to encourage behaviourial change, incentivise sustainable energy use and reduce the carbon impact of the asset, as well as utility costs.

We aim to roll out the product across our buildings, utilising the data and outcomes of our resident engagement programme to reduce the carbon footprint of our entire European portfolio, offering residents the chance to be educated on how to live more sustainably, make sustainable choices, and the opportunity to live in buildings that have a positive impact on the environment. This will increasingly become a requirement from residents going foward.

HOUSE VIEW – Market Outlook, UK & Europe | December 2023

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Growing industry recognition for Nido In 2023 Nido has also been overwhelmingly recognised for our work, through industry awards.

We are extremely proud to have won: • ‘Best Private Housing Europe’ at the Global Student Living Awards 2023 • ‘International Operator of the Year’ at the Property Week Student Accommodation Awards 2023 Our Chief Marketing Officer, Suraiya Comunello was also named ‘Woman of the Year – PBSA’ at the inaugural Property Week Inspiring Women in Property Awards.

The awards are the result of our work inspiring and looking after the wellbeing of our residents across Europe, but also of the work that our people do improving the industry’s standard on operational excellence, resident and employee experience.

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HOUSE VIEW – Market Outlook, UK & Europe | December 2023

HOUSE VIEW –Market Outlook, UK & Europe | December 2023

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2024 OUTLOOK

Our 2023 Benchmark GSL NPS (Net Promoter Score) Benchmarks 2023

Investment in the Living sector in Europe has been holding strong despite macroeconomic challenges and we’ve seen unprecedented interest and take-up in our student accommodation and coliving schemes in the countries we operate in.

Net Promoter Score (+100 to -100)

Over the next 12 months we are going to see coliving continuing to evolve as a sector, in part due to higher demand for flexible renting as well as increasing alignment between investors, developers and operators on the technology, ESG, planning, design and development aspects of this exciting sector. Coliving is also a key sector for Nido, where we are bringing our expertise in managing student residences in Europe to operating coliving communities where people live and thrive.

100

50

22 12

14 5

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12 2

0

In student accommodation we’ll see more and more developers and operators adapting to student needs and demands. If in the past this wasn’t seen as a requirement, now operators are forming a critical part of the design and asset management team, where student wellbeing and experience is informing the design, development and management strategy.

-50

-100 Nido Student

1. Large Operators (Private Halls)

2. Mid-sized Operators (Private Halls)

3. Small Operators (Private Halls)

Nido Global (Private Halls)

All Private Halls (UK)

All Uni Halls (UK)

GSL Index Score Benchmarks 2023

In 2024 Nido will be mobilising two further schemes in Madrid, one in Valencia and two in Lisbon on behalf of CPP Investments for academic year 2024/25.

We will also start mobilising two new schemes in Lancaster and Leeds on behalf of HIG and Primus for academic year 2025/26.

GSL Index Score (0 to 100) 74.2

75

73.3

69.7

70

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Being part of the development teams at the early stages of designing all these assets gives us the opportunity to create a wellbeing- and ESG-oriented living experience for students in each city, thinking holistically about interior design, events programmes and connections to the local neighbourhoods.

Nido will continue to focus on delivering the best experience possible for our residents in 2024, gathering their thoughts and feedback to improve our services, our ability to create inclusive and supportive environments, and integrating resources and technologies that make a real and positive difference to our resident communities.

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55

50 Nido Student

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As investment continues at high levels in student housing, the importance of delivering and managing quality assets is also increasing. According to Investec’s latest Future Living report, student accommodation has risen from tenth to first in terms of investor appeal since 2021 and so have students’ standards and expectations from their professionally-managed homes.

1. Large Operators (Private Halls)

2. Mid-sized Operators (Private Halls)

3. Small Operators (Private Halls)

HOUSE VIEW – Market Outlook, UK & Europe | December 2023

Nido Global (Private Halls)

All Private Halls (UK)

All Uni Halls (UK)

HOUSE VIEW –Market Outlook, UK & Europe | December 2023

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PORTFOLIO SPOTLIGHT: NIDO PORTUGAL With Juliana Petrikova Head of European Operations, Nido

In a JV with CPP Investments, Round Hill Capital acquired the Smart Studios portfolio of circa 2000 beds in July 2022. The portfolio is mostly concentrated in the Lisbon Metropolitan Area (88%) with one asset in Oporto (12%), and has been integrated under the Nido brand, which took over the building’s operations.

Nido’s central teams spent time understanding the day to day at Smart Studios including commercial, operations, finance procedures, contracts and the resident journey through workshops and spending substantial time on the ground with the teams. Using this understanding of the existing portfolio, Nido has transformed it into an ESG-focussed coliving experience through digital integration and social wellbeing for its residents across Portugal. From an online app with push notifications and access to the wellbeing hub to a full programme of events such as yoga and upcycling workshops, Nido has improved the living experience for the thousands of people choosing these buildings as their home.

Why did you decide to integrate Smart Studios under the Nido brand?

Over 16 years we have built a European PBSA portfolio of more than 18,000 beds, to great success and overwhelming positive feedback from our residents regarding the experiences we create and the way we design and manage our buildings. We have also been applying our approach to the coliving sector which displays certain similarities to PBSA and the Smart Studios integration came naturally after the portfolio was acquired.

How many buildings and beds are part of the portfolio?

How many are student buildings and how many are coliving?

We have circa 2000 beds as part of the Smart Studios integration, with four assets operational in Lisbon and one in Porto, while we work on the mobilisation of another two in Lisbon. All of these are coliving residences however, some are more student focused like Estoril in Cascais, Lisbon due to its location on campus.

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HOUSE VIEW - Market Outlook, UK & Europe | December 2023

HOUSE VIEW – Market Outlook, UK & Europe | December 2023

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How does the intergenerational member base shape the communities in Smart Studios?

Intergenerational communities are richer and more vibrant and students are able to network and find mentors within the groups of working professionals who live in the same building.

On the other hand, professionals who are new to the city are able to meet like-minded people of all ages. Nido’s events and services are catered to appeal to all demographics living in our residences.

From an experiential perspective, how does coliving differ from student living?

Coliving is much more of an emerging sector and is probably 5-10 years behind student living. However, this way of living is increasingly in demand in the UK and Europe and, as it evolves, it can learn both from build-to-rent/multi-family accommodation as well as from student housing. Coliving differs from student housing however because it can provide intergenerational living and the communities we can form and encourage via our events, initiatives and brand partnerships differ based on this different demographic mix.

What are some of the challenges and learnings you had to overcome in integrating the new portfolio under the Nido brand?

Our main focus was on people and that has been a highlight, learning from a talented local team as to how this portfolio had been working and using our own experience to come together to optimise it, has created a stronger proposition in the market. The main challenges were around systems and data, like with any acquisition, once this is sorted the rest flows more smoothly.

What does the future hold for coliving in Europe?

Similar to PBSA, we can see that people choosing or exploring to live in coliving buildings are looking for studios or bedrooms with ensuite bathrooms, as well as spacious amenity spaces for socialising with other residents. In coliving buildings, residents are also looking for partnerships and connections with the local community and local businesses, building ties to people in the immediate neighbourhood. We expect this trend to continue and for coliving assets going through planning or design at the moment to respond to these needs and adapt the ‘private-to-shared space ratio’ in a way that caters to the needs of a more diverse demographic than PBSA.

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HOUSE VIEW – Market Outlook, UK & Europe | December 2023

HOUSE VIEW –Market Outlook, UK & Europe | December 2023

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ABOUT NIDO Nido is Europe’s leading international operator and property manager of purpose-built student accommodation and residential for rent, working with some of the world’s leading investors helping add value and drive income from their portfolios. Since formation in 2007, Nido has grown into a clear market leader, having developed and/or managed over 18,000 beds across the UK and Europe during that period, and with a current portfolio comprising circa 6,000 beds (with 3,500 under development) across Denmark, Ireland, the Netherlands, Portugal, Spain and the UK. Nido attracts and looks after residents from over 100 different countries into accommodation that serves students attending over 150+ universities and academic institutions, as well as graduates starting out in their working lives and beyond.

Nido is an award-winning property manager and a key element to its success has been a focus on continually learning in order to adapt and evolve its offering, ensuring its residents get not just the best physical product but also the community and societal experience that they require.

With well over a decade of experience and a firm focus on the wellbeing and experience of its residents, Nido is the global operator of choice for both students, professionals and investors.

Further information on Nido is available at nidoliving.com

DISCLAIMER This House View is being provided solely for informational purposes. This House View does not constitute investment advice and should not be relied upon as such. This House View must not be copied, reproduced, distributed or passed, in whole or in part, to any other person. This House View is not intended for distribution to, or use by any person or entity in any jurisdiction where such distribution or use would be contrary to local law or regulation.

No representation or warranty, expressed or implied, is or will be made and no responsibility or liability is or will be accepted by Nido Or any of its respective officers, servants or agents or affiliates as to, or in relation to, the fairness, accuracy or completeness of this House View or the information forming the basis of this disclaimer.

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HOUSE VIEW – Market Outlook, UK & Europe | December 2023

HOUSE VIEW –Market Outlook, UK & Europe | December 2023

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HOUSE VIEW Market Outlook,UK & Europe | issue 8 | December 2023