GCP Student Living (DIGS) has announced that it has entered into a conditional forward purchase agreement to acquire a high specification, purpose-built, private student accommodation residence in the same locality as its Scape Surrey asset in Guildford. The property is expected to be completed for the 2020/21 academic year providing 403 beds.
Ideally located for The University of Surrey (Guildford)
DIGS says that the new property will be ideally located for access to The University of Surrey (a UK top 20 university) with around 16,000 students of whom 36% are international students. It is also within walking distance of the Academy of Contemporary Music and Guildford town centre. Guildford is also home to the University of Law and, according to DIGS, Guildford, like London, is structurally undersupplied in respect of private student residential accommodation.
Purchase gives DIGS 544 beds in close proximity to The University of Surrey
Once completed, the Group’s portfolio will include 544 beds in the same locality as the University of Surrey. This provides the opportunity to take advantage of operational economies of scale. The Company’s Scape Surrey asset has been fully occupied each year since its acquisition and has generated annual rental growth in excess of the portfolio average.
The benefits of forward funding
The acquisition of properties through future contractual arrangements, including forward purchase agreements, enables the Company to secure attractively located assets, in areas with few existing properties and scarce development opportunities, without incurring extensive development risk. The contractual terms also ensure that the assets are designed and developed in-line with the Company’s modern specifications.
About GCP Student Living
GCP Student Living is the first student accommodation REIT in the UK. The Company targets a 5.5% annualised income yield growing in line with inflation, alongside a total return of between 8% and 10%. The company invests in modern purpose built private student accommodation and teaching facilities which it says are contracted to a diversified portfolio of direct let tenants and Higher Education Institutions. GCP Student Living invests in properties located primarily in and around London where the Investment Manager believes the Company is likely to benefit from supply and demand imbalances and a growing number of international students.