Greystar – a global leader in the investment, development, and management of high-quality rental housing – has acquired five purpose-built student accommodation (PBSA) assets in the UK for £291m in an off-market transaction from the Nido portfolio owned by leading global investment firm KKR for a managed fund.
The five PBSA assets comprise a total of 2,163 units and are located in four cities – London, Glasgow, Coventry and Bristol – which are renowned for their higher education institutions. Four of the assets are operational and let to students for the 2020/21 academic year, while the asset in Bristol is under construction and due for occupancy in September 2021.
Greystar will implement a proactive asset management strategy to maximise the value of each asset and operate them under a newly created European brand, which will be brought to market later this year. Each asset currently offers a range of different room types to suit students’ individual needs and budgets. The sites are well-located close to the respective university campuses and nearby city centres, with the London sites benefiting from excellent transport links.
“The acquisition marks our re-entry into the regional UK student accommodation market following the sale of iQ and a successful six years owning and operating a separate premium portfolio in London. We see potential to generate additional yield from these assets through dynamic pricing and the introduction of our world class operating platform.
“The fundamentals of the UK student accommodation market are still strong despite the pandemic. There was a record number of applications to higher education institutions across the country and students are adapting to a hybrid model of learning. Meanwhile there is still a structural undersupply of student accommodation to meet this demand.”Ben Mowbray, Senior Director – UK Investment, Greystar
The acquisition forms Greystar’s second UK PBSA portfolio, alongside the premium London-focused brand Chapter. It follows the sale of the iQ portfolio to Blackstone for £4.7bn by the Goldman Sachs, Wellcome Trust and Greystar partnership at the beginning of 2020.
Greystar has been scaling its PBSA operations in Europe – recently announcing a new develop-to-core venture in Paris and a large acquisition of 1,500 units in Spain to grow its market leading Resa brand.
“The rise of student accommodation is a global phenomenon, driven by global demographics. The global population of students in higher education, including both international and domestic, currently stands at 250m and this is expected to double over the next 15-20 years.
“Again, this is driven by secular trends rather than cyclical factors, notably the rise of the middle class in emerging markets. Regardless of the pandemic, student housing remains a counter-cyclical asset class, so while near term occupancy may be temporarily affected, we expect rental rates to remain resilient.
“As occupancy recovers, we expect to see continued rental growth with few risks from a weak economy and labour market. Student numbers tend to rise with unemployment as graduate students ‘retool’ for the recovery phase of the cycle.”Mark Allnutt, Senior Managing Director – Europe, Greystar