GIC, APG Acquiring ‘Substantial’ Stake in $2.2B European Student Housing Provider

Singapore sovereign investor GIC and Dutch pension fund manager APG have agreed to acquire what they term a “substantial” stake in Amsterdam-based The Student Hotel, in a deal valuing the hybrid student hostelry operator at €2.1 billion ($2.2 billion).

TSH’s properties combine student housing, hotel rooms, co-working/meeting spaces, and food and beverage under one roof. APG holds an existing stake in the company alongside its founder, Scottish businessman Charlie MacGregor, and fund manager Aermont Capital, a Europe-focused offshoot of New York-based Perella Weinberg Partners.

Under the terms of the transaction, which is subject to regulatory approval, APG and MacGregor will increase their current stakes in TSH, GIC will join as a new investor and Aermont will exit the venture, the parties said Tuesday in a release. Precise financial details weren’t disclosed, but an account in the Financial Times said the investment by GIC and APG would give the partners a combined majority stake.

“We are pleased to invest in The Student Hotel as its assets are well-located, enjoy good connectivity to city centres and transportation networks, and are in close proximity to universities and other amenities,” said Lee Kok Sun, chief investment officer of real estate at GIC. “We are confident that this investment will generate resilient long-term returns.”

Distinctive Model

TSH owns 25 student accommodation assets in continental Europe, with 15 currently operational and three scheduled to open in 2022 in Madrid, Barcelona and Toulouse. The company plans to increase its holdings to 50 properties on the strength of the fresh commitments by GIC and APG, which first entered the venture with a €100 million investment in 2015.

TSH touts its student housing hybrid as a distinctive model that proved resilient during the pandemic, as the company was able to remain cash-positive by increasing room allocation towards students when leisure and corporate travel plunged.

“The Student Hotel’s hybrid hospitality model is unique,” said Tracy Stroh, head of European real estate at GIC. “Anchored by purpose-built student accommodation that appeals to the student demographic, yet still catering to both business and leisure uses, this flexibility enables TSH to capture opportunities as demand patterns fluctuate throughout the year.”

With services pitched to Millennial and Gen Z customers, TSH expects to benefit from a strong summer season as the travel market rebounds post-COVID, complementing student bookings for the 2022-23 academic year that already stand at record levels, the company said.

“We are very excited to welcome GIC on board, and together with APG, we look forward to bringing The Student Hotel experience to more cities across Europe,” MacGregor said. “We have bold plans and the additional committed capital will allow us to be even more ambitious.”

Academic Achievements

GIC’s latest leap into student beds comes after the sovereign wealth fund formed a joint venture with US rental housing operator Greystar to acquire Britain’s third-largest student accommodation provider, Student Roost, from Brookfield in a deal announced last month.

GIC and UK operator Unite Students formed a joint venture in 2017 and announced their first investment in February of that year with the £227 million acquisition of a five-building, 3,067-bed student housing complex at Aston University in Birmingham. More recently, the JV acquired two London properties for £342 million ($472 million) in a deal announced in June 2021.

GIC had previously partnered with Dubai-based Global Student Accommodation Group in 2016 to buy a portfolio of UK student housing projects from funds managed by Oaktree Capital Management. No sales figures were disclosed, but the assets were expected to be worth £700 million when completed.

Beyond Britain, GIC was identified by market sources as the buyer of a 49 percent stake in an Australian student housing portfolio from investment firm Wee Hur Holdings for A$567.9 million ($407.2 million), as reported by Mingtiandi in April of this year.

APG, an avid investor in rental housing vehicles, has also hooked up with Greystar as a partner in the US firm’s China rental housing fund and an Australian multi-family venture.