European-headquartered Global Student Accommodation’s GSA Coral vehicle has bought 27 US-based student housing assets in its first expansion into the North America region.
The price for the portfolio has not been disclosed by the parties but is understood to be more than $700 mln (€575 mln). The vendor was UCAL, a joint venture between the California State Teachers Retirement Fund (CalSTRS) and student housing operator University Communities.
GSA is already bidding on further US portfolios and expects to expand to between $1.5 bn and $2 bn of student housing assets in the country by the end of 2022.
GSA Coral’s equity is from high net worth investors, mainly from Europe and also including a substantial minority from Asia.
The private vehicle was acquired in 2014 by the GSA team which is headed by former UNITE founder Nick Porter.
Will Rowson, who joined GSA as chief executive last summer, said that Porter had ‘wanted to enter the US for a number of years and has been patient, not least because GSA needed an operator to do so.
‘We are acquiring UComm, the property management company, as well as the assets. There aren’t many transactions at scale with the opportunity to do both like that, anywhere in the world.’
He said the US market is not only large - with 20 million students, or close to 10% of the world’s total numbers - but in the short-term during the Covid pandemic, more stable than other countries which have higher numbers of international students.
Some 95% of the cohorts at US universities are domestic students and Rowson said occupancy has held at circa 93%-94% in this portfolio against an average in the past of 96%.
By comparison, European cities like London with high numbers of international students, saw occupancy drop in 2020.
GSA is also invested in Australia and Japan, with one asset in China, while in Europe it is present in Spain, the UK, Ireland and Germany.
Its US-based JV partner on some of its European portfolio in Spain, Ireland and the UK, Harrison Street, is not involved in the UCAL acquisition. It is thought Harrison Street was a rival bidder, but did not want to take on the property management business with the assets.
GSA has signed a forward arrangement with University Communities to partner on acquiring and developing more assets in the US and raised debt finance to acquire the UCAL portfolio via a whole loan from Blackstone Real Estate Debt Strategies, with Wells Fargo taking the senior piece.
