Greystar Real Estate Partners has acquired five purpose-built student accommodation (PBSA) assets in the UK for €334.8m (£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 situated in four cities renowned for their higher education institutions – London, Glasgow, Coventry and Bristol. 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, allowing for a range of pricing. The sites are well-located close to the respective university campuses and nearby city centres, with the London sites benefiting from excellent transport links.
Ben Mowbray, Senior Director – UK Investment, Greystar, said: "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 an 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.”
Mark Allnutt, Senior Managing Director - Europe, Greystar, said: "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 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. 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.”
