CIBT Education Group’s Toby Chu is one of the most active developers in Canada, but says his student-related real estate is not marketed as purpose-built student housing, or the acronym PBSH.
Chu addressed the misnomers of this growing asset class in Canada at SHURE-Vancouver on April 20, held at the University of British Columbia.
“What if there is a drop in that market? What if there’s no students? I know it won’t happen,” Chu told the SHURE-Vancouver audience. “But, what if the bank will be sitting there for properties that we no longer call PBSH?”
Expecting a problem with a potential exit strategy, Chu said he formally identifies his student-related real estate as market-rental apartments.
The misnomers about student-related real estate are not an issue in more mature markets, such as the U.S. or U.K., where it is commonly known by the acronyms PBSH or PBSA, respectively. However, in Canada and the European Union, there are multiple terms for this type of product. For this reason, the total size of the market is unknown.
Chu is one of the largest owners and operators of student-related real estate in British Columbia, with 1,400 beds across eight operating buildings, serving students from 92 colleges and universities.
“I never called them purpose-built student housing,” Chu told the audience, referring to his student-related real estate assets.
“For us it’s pretty clear it is for students. But you know, in reality, once we go into the real world, you encounter all sorts of different myths. Take purpose-built student housing (PBSH) to your banker and nine of out 10 say no [to the deal.]
There is also the challenge of working with municipalities in Canada in terms of zoning, according to Chu.
“I’m going to build student housing, and the city starts flipping the codebook,” said Chu. “When we go into any city entity in discussion, we’ve been identified as market rentals. Furthermore, if somewhere down the road you want to exit, you want to sell this building, I will have one hundred million to spend on purpose-built student housing.”
Chu’s CIBT Group owns 31 colleges in Canada, educating roughly 10,000 student per year. At SHURE-Vancouver, he announced a name change to his real estate business.
“We’ve been known as CIBT Education Group. Some of you may have seen buses around and SkyTrain and all that on Virgin Radio, but our student housing properties are known as GEC, which originally stood for Global Education City. But as we are public, we are starting up a student investment fund mostly for the funding of building additional properties and some of our properties are now becoming more than one building.”
Chu said it’s timely to change the name of his real estate business to Global Education Community.
“It’s no longer a building throughout the city, but a community of five thousand to six thousand students living together at one place. So, hence the name change.”