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Greystar buys UK PBSA assets ahead of new brand launch

Kyle Street, Glasgow.

Rental housing specialist Greystar Real Estate Partners has acquired five purpose-built student accommodation assets in the UK for £291 million (c€336 million).

The assets have been acquired in an off-market transaction from the Nido portfolio which is held by investment firm KKR on behalf of a managed fund.

The five assets provide 2,163 units in total, located in London (two assets), Glasgow (pictured above), Coventry and Bristol. Four are operational and have been let to students during the 2020/21 academic year. The Bristol building is under construction and will be ready for students in September.

Each of the buildings has a range of different room types to suit different needs which allows for a range of pricing.

Greystar said in a statement that it will “implement a proactive asset management strategy” to maximise the value of each of the assets which will be operated under a newly created European brand, to be brought to market later this year.

Acquisition follows £4.7bn iQ sale

The purchase is Greystar’s second UK PBSA portfolio. It also owns the premium London-focused brand Chapter. The acquisition also follows the sale of the iQ portfolio to Blackstone for £4.7 billion by the Goldman Sachs, Wellcome Trust and Greystar partnership at the beginning of 2020.

Greystar has increased the size of its PBSA operation in Europe, recently announcing a new develop-to-core venture in Paris and the acquisition of 1,500 units in Spain for its Resa brand.

“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,” Greystar’s senior director, UK investment, Ben Mowbray said. “We see potential to generate additional yield from these assets.”

He added that 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.”

Global student population 250m and set to double

The firm pointed out that the global population of students in higher education, including both international and domestic, currently stands at 250 million 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,” said senior managing director, Europe, Mark Allnutt. “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.”