Greystar Real Estate Partners has acquired five purpose-built student accommodation (PBSA) assets in the UK for €335 mln (£291 mln) from the Nido portfolio owned by global investment firm KKR.
The five PBSA assets were purchased in an off-market transaction and comprise a total of 2,163 units situated in four cities with 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 plans to 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.
KKR acquired the five PBSA sites in 2018 to develop high-quality, professionally managed accommodation. KKR worked closely with Nido Student as operator of the sites, having successfully collaborated on student accommodation developments in the Netherlands.
‘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,’ said Ben Mowbray, senior director – UK Investment, Greystar. ‘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. 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.’
Seb D'Avanzo, managing director in European Real Estate at KKR, said: ‘We continue to see the UK as a strategically significant market for PBSA, with strong projected demand, and will continue to assess future opportunities to acquire and develop quality assets.’
