GIC JV invests £227m in UK student housing

The Singaporean sovereign wealth fund has teamed up with Unite Students to acquire more than 3,000 beds in Birmingham.

A joint venture between GIC and Bristol-based student housing specialist Unite Students has bought the Aston Student Village (ASV) for £227 million ($283 million; €267 million).

The pair have invested in Aston University’s only accommodation offering which comprises 3,067 beds across five large, detached properties on the university’s campus in central Birmingham.

The acquisition will be funded with 40 percent equity – using capital from the London Student Accommodation Joint Venture (LSAV), the pair’s 50:50 joint venture which was created in 2012 – and 60 percent debt provided by TH Real Estate under a 10-year facility. Unite will initially fund its share of the acquisition through additional borrowings, with disposals planned for later in the year offsetting this increase in net debt.

“ASV is a high-quality asset uniquely located both on-campus and in the city center. We are confident in the long-term growth potential of this asset and the student housing sector which we find attractive for its resilient income streams,” commented Madeleine Cosgrave, head of Europe at GIC Real Estate.

The purchase price represents an acquisition yield of 5 percent. ASV will generate gross annual income of around £17 million for the 2017/18 academic year and will be immediately accretive to earnings and NAV, the firms said in a statement.

Unite is planning to invest in the accommodation over the summer and integrate the buildings into its PRISM operating system to drive rental growth opportunities as well as cost and operational efficiencies.

“Birmingham is one of the top cities for students and this acquisition demonstrates the value of our strong relationships with Universities and also the benefit of our position as market leader, both by scale and efficiency and the service that we are able to offer to students as a result of our PRISM operating system,” said Richard Smith, Unite Students’ chief executive.