GPT forges into student accommodation in funds play

The listed GPT Group is looking to steal a march on its local listed rivals by getting into the hot student accommodation sector.

UniLodge South Bank, student accommodation complex in Brisbane

The listed GPT Group is looking to steal a march on its local listed rivals by getting into the hot student accommodation sector.

The group plans to extend its tie up with Canadian group QuadReal, for which it handles a logistics mandate, into student housing, where it already has a local portfolio worth more than $1bn.

Local player Scape and a series of international companies dominate the student sector, although Dexus, via its funds arm, also has an exposure to the area.

GPT said it had commenced the investment and asset management of QuadReal Property Group’s existing wholly-owned Australia and New Zealand student accommodation portfolio.

The mandate comprises a significant portfolio of nine student accommodation assets housing about 5,000 beds.

“We are very pleased to be strengthening our partnership with QuadReal through the addition of this student accommodation mandate to our funds management platform,” GPT chief executive Bob Johnston said.

“We have a long history of leveraging our expertise and experience to add value for our investment partners, and we look forward to building upon this track record,” he said.

The portfolio comprises assets in Melbourne, Brisbane, Adelaide and Auckland, and the student blocks have high occupancy levels and sit near major universities.

Property management services will continue to be provided by UniLodge, one of the largest players in student accommodation, which is running hot.

Last month, US private equity and property powerhouse Blackstone forged into the booming area, picking up the Student One business for more than $500m and flagging ambitions to become a long-term player.

Blackstone swooped on the Brisbane-based business which controls three sites with around 2300 beds in an off-market move after an earlier play by a rival international operator did not result in a deal.

The move comes as the “living sector” spanning apartments, hotels and even social housing is drawing big investors into Australia while traditional commercial property areas like offices and shopping malls come under pressure.

Plays in the past week include the private Coronation Property setting up a new unit to house its expanding build-to-rent operations and, in student accommodation, US investment house Nuveen taking a stake in The Switch.

Offshore investors are backing local managers with the capacity to expand as they bet that the trend of international students seeking out top universities in major cities will accelerate. These student flows are partly driven by global instability and even the prospect of an economic slowdown next year is expected to lift numbers as people return to study.

The sector has been consolidating with the top five players accounting for 80 per cent of the industry. UniLodge is among the largest and Scape has been buying up rival platforms as the sector bounces back strongly from the depths of the Covid-19 pandemic.