Bahrain's GFH acquires $300m US student housing portfolio

The sector is growing with the rise in US university enrolment and supply shortages

Bahrain-based GFH is expanding its portfolio in the US. Philip Cheung / The National

Bahrain-based investment bank GFH Financial Group has acquired a student housing portfolio in the US in partnership with its Atlanta-based subsidiary, Student Quarters (SQ), in a deal worth $300 million as the sector continues to grow.

It acquired five assets, including buildings within walking distance of Texas A&M University, Michigan State University and Missouri State University, GFH said in a filing on Thursday to the Abu Dhabi Securities Exchange, where its shares are traded.

The portfolio has more than 2,000 beds, with the buildings featuring amenities such as swimming pools, courtyards, coffee shops, study lounges, clubhouses, game rooms and fitness centres.

The student housing sector “is experiencing positive momentum, given the rise in US university enrolment, the growing US population and scarcity of class-A pedestrian, purpose-built assets”, said Nael Mustafa, co-chief investment officer of real estate at GFH.

GFH has been focusing on international expansion. It set up its US operations in May by acquiring a majority stake in SQ Asset Management, which focuses on student housing.

The US student housing market posted a near-record transaction year in 2021, exceeding $10 billion in investment sales volume, according to a report by CBRE.

This volume was only exceeded in the sector's history in 2018, the report said.

As part of its investment strategy in the student housing sector, GFH aims to build a diversified portfolio that focuses on the top 150 public universities in the US, it said.

These are institutions with “strong academic and sporting facilities and that have shown steady growth in enrolments year on year”, GFH said.

“The student housing sector has performed well historically, even during the pandemic, as evident by an average stable occupancy rate well above 90 per cent and an equivalent high rental collections rate,” the investment bank said.

“Overall, the sector has witnessed supply shortages with the need for purpose-built student housing assets that are within walking distance of Tier-1 institutions throughout the country, spurred by rising enrolments and limited availability of university-provided accommodations.”

GFH has an investment portfolio that spans the Middle East, the US, the UK and Asia in a number of sectors, including health care, education and logistics.

Last year, it closed more than $1bn worth of new investments in those segments, with its assets growing by about 23 per cent to $8.08bn at the end of 2021.