Legal & General completes double PBSA acquisition from GSA

Building on its strong track-record of investing and lending into the sector, the acquisition marks the launch of the Legal & General Student Living Platform.

Social and study building at Boho Scotway House in Glasgow - GSA | PBSA News
Social and study building at Boho Scotway House in Glasgow.

Asset manager Legal & General Investment Management (LGIM), on behalf of Legal & General Retirement Institutional (LGRI), has recently announced the completion of its first direct-let purpose-built student accommodation (PBSA) acquisition, following the purchase of the Aqua Portfolio from Global Student Accommodation (GSA). Knight Frank advised LGIM on the acquisition, MTRE advised GSA.

The GSA portfolio includes two PBSA developments – Clifford House in Exeter, which comprises 312 bedrooms, and Scotway House in Glasgow, which comprises 399 bedrooms. The schemes were purchased for a combined pricing of c. £122m and completed in 2019 with proven historic rental growth and a consistent 98%+ occupancy.

“We’re excited to have made our first direct-let acquisition in the student accommodation space. These assets provide high quality PBSA accommodation, situated in locations benefitting from strong academic institutions and demand from students, looking for buildings designed to meet the requirements of modern university life.”

Neil Dovey, Head of Annuity Transactions, LGIM

LGIM has been operating within the student accommodation sector for over ten years following its first investment in 2011. It currently manages over £1.2bn in the sector, across equity and debt investments. The new direct-let PBSA strategy will look to target operational schemes no older than five years old.

“Investing in direct-let PBSA assets forms the next iteration of our Living Sector strategy. The sector has demonstrated its alignment to our strategic requirements, which includes a significant focus on ESG and provides diversification. Following the success and growth of our Build to Rent platform, this strategy further supports the long-term investment goals of LGRI.” 

Adam Burney, Head of Annuity Build to Rent & PBSA, LGIM

LGIM aims to deploy approximately £0.5bn of capital into the sector over the next two years, with the longer-term goal of growing the portfolio to over £1bn and directly managing c 5,000 beds across the UK. The PBSA strategy supports Legal & General’s track-record in the investment, development, and operation of residential assets – with over £1.1bn invested across suburban Build to Rent, affordable housing, and later living.

Launched in 2016, LGIM’s Build to Rent strategy has committed over £3bn of institutional capital into the sector and expanded its portfolio to 24 schemes across 13 cities nationwide.

“Pension scheme capital is being put to positive use in the real economy – with tangible benefits across generations. These buildings provide students with quality accommodation, while the British economy should benefit from long-term investing in real assets. We’re proud of how expertise from colleagues has unlocked these benefits for both the new generation as well as the long-term future of those looking to a sustainable pension.”

Andrew Kail, CEO, Legal & General Retirement Institutional (LGRI)