„We intend to attract European capital to the USA“
The W5 Group is currently seeing a lot of interest from European institutional investors in moving their funds to the USA. „It's time to take another step as an entrepreneur — in the future, we will offer other investors innovative investment opportunities in the residential sector — we want to attract European capital to the USA,“ says Celine Winter, Director of Business Development.
Family office roots
W5 was founded five years ago, and can be traced back to the family office of entrepreneur Ralph Winter. The founder of the W5 Group built up a portfolio of 40,000 student apartments and 100,000 rental apartments in Europe, with a volume of 30 billion euros. Today, W5 Group assists family offices, wealthy private investors and institutional investors, in both the USA and Europe.
Winter sees residential real estate as a segment to offer something special. „The idea is to develop the concept of innovative living as a brand, and bring it to the market," she said. The target group is younger people and midlifers, Generation Z and millennials. The concept is shared living. In the projects, there are three or four bedrooms in each unit, each with its own bathroom. The kitchen and living room are shared.
There are also facilities such as a gym in the building, a pool, a garden for dogs and services such as restaurants, cafés and retail outlets on the first floor. It's also not unusual to have a golf simulator in the building, which is completely normal in the USA. „As there are also co-working spaces, you hardly need to leave the building at all,“ she says.
What sounds attractive to investors is expensive for users. „The aim as an investor is for users to pay more as tenants than in the neighboring building," she explains. "It's a high-priced product, and we expect to pay 1,700 to 2,100 dollars for a bed and a bathroom. That sounds a lot from a German perspective, but you always have to bear in mind the income situation in the USA.“
Student apartments in demand
Investments in student apartments are a bread-and-butter business in the USA, and have long since ceased to be a niche market. Many people want to invest there. Blackstone, for example, has invested billions. „When selecting projects, it is important to pay close attention to the university," says Winter. Universities that grow by 6 to 10% annually are ultimately a safe bet. When selecting locations, it is also important that the university has a good reputation in the field of sport. In addition, a student apartment should be no more than a ten minute walk from campus.
Since 2018, W5 has invested around 5 billion dollars in 9,000 residential units. Of this, 1.2 billion dollars has been developed in the „Innovative Living“ segment. In terms of the portfolio, 50% is student housing, 25% shared living, and the rest micro-apartments and rented single family homes. Winter emphasises that in the past, as a family office, the company has always invested 90% equity in the Innovative Living portfolio. It is now taking the next step and bring in co-investors.
Regulation also speaks in favour of a US investment, as developments of this kind are easier to implement in the USA. In addition, there is also an annual rent adjustment in this segment in the USA.
