Singaporean sovereign wealth group GIC and Dutch pension fund manager APG will take a majority stake in The Student Hotel in a deal that values the European student accommodation and hotel group at €2.1bn.
APG and TSH’s founder Charlie MacGregor will increase their stakes in the group, while GIC will be a new investor. Aermont, the European asset manager that has part-owned the business since 2014, has sold out as part of the deal.
MacGregor opened the first Student Hotel in 2012, and has grown the business to 25 sites across eight countries. APG and GIC have committed to invest further in an expansion to other European cities, with plans to take the portfolio to 50 hotels including one in London and another in Scotland.
“I’ve been in this industry for 17 years and I feel like I’m just getting started,” said MacGregor, adding that the backing of “two of the strongest investors in the world” would help “take the company to the next level”.
Student accommodation has become an area of particular investor interest given the opportunity for a more stable income than a typical hotel business, especially during periods of economic turmoil.
Singapore’s GIC is already one of the most active investors in student housing in Europe. Last month, GIC and Greystar Real Estate Partners acquired Student Roost, a UK student housing provider from Brookfield for £3.3bn. The portfolio spans more than 50 properties with over 23,000 beds across UK university cities.
While stock markets globally have been battered by the pandemic, and more recently by Russia’s invasion of Ukraine, property values in sectors such as rental housing and warehouses have held up relatively well.
TSH has its headquarters in Amsterdam and employs 650 people. It has more than 10,000 rooms open or under development.
During the pandemic, TSH increased room allocation towards students when leisure and corporate travel was significantly reduced, which helped support occupancy rates and remaining cash flows.
“We outperformed the hospitality sector hands down [during the pandemic] because our hotels were open and we were fuller than almost everybody else,” said MacGregor.
He added that the pandemic had proved the business model was “stable and resilient”. “From an investment point of view it’s very stable on the downside, but it’s also able to take the upside when markets return,” MacGregor explained.
TSH said student bookings for the 2022-23 academic year stood at record levels. The hotels also offer co-working space for companies.
MacGregor said the new funds would be used to expand TSH to more cities across Europe. There are currently 15 fully operational sites with 10 more under development. New hotels are set to open in Madrid, Barcelona and Toulouse later this year.
MacGregor added that he hoped to realise the expansion to 50 sites within the next seven years.
Lee Kok Sun, chief investment officer of real estate at GIC, said the assets were “well-located, enjoy good connectivity to city centres and transportation networks, and are in proximity to universities and other amenities. We are confident that this investment will generate resilient long-term returns.”
Additional reporting by George Hammond
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