UK-Based Student Housing Investor Lands in US Market

UK-based leading student housing investor Global Student Accommodation Group has entered the US market with a major purchase, an 8,000-bed, 27-property portfolio located in 18 states and 19 primary markets. GSA acquired the portfolio in a joint venture with University Communities and the California State Teachers Retirement Fund, and the purchase price was not disclosed, although some industry sources are citing a price tag of $700 million.

GSA has been scouting entry into the US market, buy waited for the right opportunity. This deal provided scale, the ability to provide attractive investor returns and an opportunity for value creation. In a statement on the purchase, Will Rowson, CEO of GSA investment management, said, “We have been patient to source the right opportunity that fits with our investment criteria and we are very pleased to have secured a major foothold across the country.”

To drive value in the portfolio, GSA will leverage its 30 years of experience in the student housing space. The firm is bullish on this market, expecting what it characterizes as “unprecedented growth” in both the domestic and international student housing arenas over the next decade. This portfolio is well positioned to profit from that growth, already enjoying 96% current occupancy.

While GSA’s entry in to the US market signals good news for the future of the asset class, student housing has had a volatile year. During the pandemic, most universities closed in-person classes, and many students returned home. While student housing vacancy has increased during the pandemic, rents have also increased. A report from Moody’s Analytics found that rents grew by 1.3% per bed and 1.8% per property. This is the first time that rents have outpaced occupancy in student housing. The South Atlantic and Northwest regions led rent growth in student housing, with rents growing 2.5% per unit in the South Atlantic and 2.8% per bed in the Northeast.

Other student housing investors are seeing the same potential for growth. In September, W5 Group launched a student housing initiative, targeting equity, preferred equity or mezzanine investments of $20 million or greater in developments and existing assets near universities with strong enrollment and limited competing supply. Like GSA, W5 has a bullish outlook on student housing following recovery from the pandemic.

The GSA deal included the acquisition of the property management company UComm. As a result, GSA will manage and operate all properties in the portfolio. The firm has also entered into an agreement with University Communities to acquire and develop future student housing properties in the US.