Morgan Stanley, Global Student Accommodation Strike Student Housing Deal

A Morgan Stanley Real Estate Investing fund and Global Student Accommodation have announced a joint venture partnership focused on student housing.

GSA is contributing $1.6 billion of initial seed assets to the JV, with close to 15,000 beds across 21 states and 29 cities. These properties include GSA’s existing US portfolio acquired in 2020, along with the recently closed acquisition of more than 8,100 beds across prime locations from coast to coast. Together, nearly two-thirds of the portfolio are at prestigious Power Five schools.

“Since entering the US market, GSA has been deliberate in executing its growth strategy, proven by our most recent acquisition, enabling us to seed this partnership with a sizable and highly attractive portfolio,” GSA Chair Alec Burger said in prepared remarks. 

A Turnaround in Investor Sentiment 

The student housing sector has been regaining momentum since the start of the pandemic, when investors expressed caution as many universities and colleges went online and students returned home. 

Since then, lured by the steady returns, institutional investors have been flocking to the category, or testing the waters for the first time, as is the case with Morgan Stanley. “After careful study of the student housing market, we looked for a scalable opportunity and a best-in-class partner for our entry point,” John Klopp, Global Head of Real Assets at Morgan Stanley Investment Management, said in prepared remarks. “This venture achieves both.” 

Chris Epp, managing director of Walker & Dunlop Investment Sales, well remembers the darker days for student housing. “While student housing performed exceedingly well throughout the pandemic, it was tough to sell  an industry laden with headlines about Zoom lectures features and empty football stadiums,” he tells GlobeSt.com. “Now with vaccines in arms, full classrooms and jam-packed football stadiums, investors have flooded the sector. The fall was an auction like we’ve never seen before and large JVs like this one are a clear indication there is no end in sight.” 

Now the industry has returned to the norm, Brendan Miller, principal and chief investment officer of Thorofare Capital tells GlobeSt.com. “College students in our view prefer to move into a location that is proximate to campus with like minded students versus moving to an apartment building,” he tells GlobeSt.com. There is significant demand from young adults that are excited to get back to a collaborative learning environment, he adds.