Future Fund signs up to Greystar’s $1.6bn student housing play

Australia’s sovereign wealth fund will pour about $350m into a deal to get a slice of seven student complexes.

Wee Hur planned student accommodation for 124 Waymouth Street in, Adelaide.

The Future Fund has stepped into the housing market, backing US group Greystar’s acquisition of a $1.6bn student housing portfolio in one of the largest ever deals in the hot sector.

After being hit by the pandemic, student housing has bounced back strongly and is still considered a growth sector despite the Albanese government’s crackdown on international students, as there is still a shortage of places.

The move by the Australia sovereign fund is a rare play both in the local property market and in housing, but came ahead of government moves to expand its mandate to drive ­capital into Labor’s agenda on ­affordable housing, green energy projects and critical infrastructure.

The $230bn fund is backing Greystar as it buys a collection of student housing complexes along the eastern seaboard from Singaporean company Wee Her, which was backed in its own expansion by sovereign wealth fund GIC.

The Future Fund is believed to be tipping in about $350m into the deal and Greystar is also backing the move with its own balance sheet, industry players said.

Greystar is a global rental housing and investment manager and had flagged its ambitions in the sector, but only locked in the purchase of the seven-asset, 5,662-bed purpose-built student accommodation portfolio that spans cities along the eastern seaboard on Monday night.

GIC has ridden the dramatic rerating of the sector, after it injected about $568m into the Wee Hur trust that built up the portfolio in 2022.

The purchase is a significant milestone for Greystar as it solidifies its presence in the Australian market and sees it plunge into the student housing after already setting up in build-to-rent.

The portfolio, spanning Sydney, Melbourne, Brisbane, Adelaide, and Canberra, includes sites near top Australian universities, and the properties can be expanded in future. Greystar plans to upgrade the facilities, refresh branding, and integrate its operational platforms.

“This acquisition is a pivotal step in Greystar’s Australian journey,” Greystar chief investment officer Wes Fuller said. “We are committed to delivering exceptional housing solutions that meet the needs of students while enhancing the quality and functionality of these properties.”

Greystar executive director, investment management, Asia-Pacific, Adam Pillay, noted the importance of the acquisition for the region. “Australia’s student housing sector is experiencing strong demand, driven by its world-class education institutions, a growing international student population, and an under-supply of institutional-quality housing. Our focus is on creating welcoming, thoughtfully designed spaces that support students in achieving their academic and personal goals,” he said.

Greystar’s expansion into Australian student housing fits with its existing developments, including The Gladstone, a recently opened build-to-rent community in Melbourne.

The deal also reinforces Greystar’s position as a global leader in student accommodation but also underscores its commitment to developing innovative housing solutions.

Wee Hur will keep a 13 per cent stake in the portfolio in what it said was a sign of its belief in the portfolio that it has built up over the last decade. It got into student accommodation in 2015 with its first asset in Brisbane. Building on that foundation, it launched an unlisted trust a year later with the aim of creating a portfolio of 5,000 beds across key Australian cities.

The group established Y Suites, a dedicated student housing brand that has since become a well-known name in the market, and the new owners could look to strengthen its mid-market positioning.

Wee Hur Capital chief executive Goh Wee Ping said the deal showed the company’s vision amid global uncertainty during the pandemic, when it recapitalised with a unit of GIC. “Two years later, as the PBSA market rebounded and our portfolio approached full stabilisation, we capitalised on yet another opportunity to unlock maximum value for our stakeholders through this landmark transaction. We look forward to a new partnership with Greystar and its co-investors,” he said.