GIC, Wee Hur in Talks to Sell Aussie Student Housing to Greystar in $1.1B Deal

US multi-family giant Greystar is closing in on a deal which would give it ownership of an Australian student housing portfolio spanning 5,662 beds, according to market sources who spoke with Mingtiandi.

The biggest rental housing landlord in the US is now in exclusive talks with Singapore’s GIC and SGX-listed developer Wee Hur to invest in the set of seven properties across Sydney, Melbourne, Brisbane, Adelaide and Canberra in a deal which values the portfolio at A$1.6 billion ($1.1 billion), according to an account this week in the Australian Financial Review.

In a statement late Thursday, Wee Hur acknowledged that its Aussie student housing holdings are currently the target of a potential deal, while cautioning that no agreement has yet been reached.

“The Company wishes to inform its shareholders that it is currently engaged in early-stage confidential discussions with a third party involving its purpose-built student accommodation business in Australia, which may or may not lead to a transaction,” the company said.

While the deal is understood to require Greystar to raise additional capital, a successful transaction would allow the US investor to gain a foothold in a market that it has been coveting for some time.

“(Australian student housing) is a keen focus for us. We’re looking at the best way to enter, whether it’s organic or inorganic,” Adam Pillay, executive director of investor relations and APAC investment management leader at Greystar told Mingtiandi in a March interview. He added, “So it’s a focus of ours in 2024; I’m hopeful that we’ll have some runs on the board by the end of the year.”

29% Jump in Valuation

GIC currently owns a 49.9 percent stake in the vehicle holding the seven purpose-built student accommodation assets, with the remainder belonging to a Wee Hur-managed fund. The sovereign fund is said to be exiting its investment in its entirety, should the deal be consummated, while market sources indicated that Wee Hur plans to retain a stake in the vehicle.

Greystar is understood to be in exclusivity for the purchase of the portfolio through the end of this month, with the US firm in talks with Australia’s Future Fund and other investors to provide capital for the acquisition, according to the account in the Financial Review. A GIC spokesperson declined to comment on the reported transaction, while Greystar had not yet replied to inquiries from Mingtiandi by the time of publication.

Under the reported terms, Greystar would be paying the equivalent of A$285,586 per bed for the portfolio. The deal would represent an 40 percent increase in pricing from the A$1.14 valuation tagged onto the portfolio when GIC purchased its stake from the Wee Hur-managed vehicle for A$567.86 million in April of 2022.

With Australia facing a housing shortage at the same time that its international student population booms, JLL estimated in a report earlier this year that the country is facing a significant student housing deficit.

“Our analysis suggests there will be an underlying demand for 10,500 beds per annum over the next five years, in contrast to the supply of only 3,500 beds (vs pre-COVID19 supply of 5,200 per annum 2016-2019), implying a significant shortage in the provision of PBSA from 2024 onwards,” the property consultancy said. The report added that, “The mismatch supports the outlook for strong rental growth and occupancy performance.”

With some analysts blaming Australia’s housing crisis on immigration, Australia’s parliament is next month due to consider legislation to cap international student enrollment at the country’s universities as 270,000 next year.

Mingtiandi first heard reports that the Wee Hur-GIC portfolio was in play as early as May this year with Greystar in 2020 having purchased a Melbourne rental apartment property from a unit of then SGX-listed Chip Eng Seng for A$65 million. That Melbourne asset is one of six Australian projects owned by Greystar.

Student Focus

Globally Greystar has nearly $18 billion in student housing assets under management in a portfolio of 110,000 beds.

Earlier this month the South Carolina-based firm broke ground on a 540-bed student housing complex at Merrimack College in Massachusetts which will add to a portfolio linked to 82 universities globally.

In August Greystar, together with Chicago-based investment manager Harrison Street announced plans to develop a 649-bed student housing facility at the University of Kentucky in Lexington.

In April of this year Greystar topped out its first Australian rental apartment complex, an A$500 million Melbourne project which will offer 700 rental units when completed.