GEC’s Pure-Play Pivot: Exits Education, Doubles Down on Student Housing

Report Highlights

• Management is focused on building a stable, high-quality rental portfolio aimed at an eventual sale to a large institutional buyer. Rental assets offer inflation-protected income, strong demographic support, and low volatility—making them attractive to pension funds and institutions.
• GEC’s current portfolio includes 14 student housing buildings in Greater Vancouver — eight operational and six in the pipeline — totaling over 4,200 beds and an estimated build-out value of $1.4B. 
• The operating projects have potential to generate ~$20M in revenue, and ~$14M in NOI, or ~$12K in NOI per bed annually. As of 2024, they were appraised at $244M. These properties serve students from over 95 institutions, and 70+ countries, with Canadian students making up more than 40% of residents.
• The development portfolio includes six buildings across four projects, totaling 2,988 beds, projected to generate $48M in annual NOI.  Based on a 4% cap rate, we value these assets at $1.2B upon completion.
• While reduced immigration targets and cuts to international student permits pose challenges for education providers, GEC is buffered by a strong base of Canadian students. Vacancies for affordable units below $1,750/month, GEC’s target market, remain critically low at under 1%.  With rental supply projected to lag long-term demand, and Vancouver remaining a top destination for both domestic and international students, we maintain a positive outlook on the city’s student housing market. To our knowledge, GEC has no direct competitors in Western Canada.
• Relative to REITs, GEC is trading at 6x forward revenue and 8x forward EBITDA vs sector averages of 12x and 20x, respectively,  a 56% discount.

Divestment of Sprott Shaw College 

In July 2025, GEC signed a definitive agreement to sell its Sprott Shaw College (SSC) subsidiary for $35M in an all-cash transaction, equivalent to $0.52/share. SSC generated $42M in revenue in FY2024, and $31M in the first nine months of FY2025 (annualized at $41M). We note that the sale price implies a revenue multiple of 0.85x, and an EBITDA multiple of 6.68x, which we consider reasonable, as it aligns with the multiples of large NYSE listed education services stocks such as New Oriental (NYSE: EDU), TAL Education (NYSE: TAL), and Graham Holdings (NYSE: GHC).

GEC originally acquired Sprott Shaw in 2007 for $11M, and the sale price of $35M represents a 517% ROI, or approximately 29% p.a. over 18 years. This transaction is the latest in a series of value-accretive deals by management, underscoring their strong execution track record. The table below summarizes key transactions that reflect management’s performance. 

Valuation in line with large-cap NYSE-listed education peers. Generated 517% ROI. Proven management team

GEC Management Track Record

Following the divestment of SSC, GEC will retain ownership of its language schools—Sprott Shaw Language College (SSLC) and Vancouver International College (VIC)—and will now focus primarily on its GEC student housing platform, the largest off-campus housing provider in B.C.

GEC is transitioning into a pure-play student housing company, leveraging over a decade of experience in student housing, and 30+ years in the education sector. With SSC generating approximately $40M+ in annual revenue, the company’s new annualized revenue run rate is expected to be $30M+ (previously $70M), comprising $20M+ from student housing, and around $10M from its language schools, alongside a reduction in headcount from 650 to 170 employees.

Student Housing Portfolio – Business Model and Exit Strategy

The company’s business model involves acquiring underperforming multi-family properties for renovation, as well as purchasing undeveloped land for the ground-up development of new student housing buildings. For the former, GEC aims to create value by renovating existing properties, increasing rents, and reducing operating costs through professional management, and economies of scale. 

Compared to multifamily, student housing is a specialized asset class with generally lower supply due to requirements for furnishings, services, and community events

Typically commands higher rent per square foot and offers greater yields for investors. Rental guarantees add income security. Risks: higher OPEX, seasonal vacancies, active management required

Management aims to build a high-quality rental portfolio that delivers steady cash flow and long-term capital gains, with a view to exiting via a sale to a large institutional buyer.

Renovate & develop → boost rents + cut costs → stable cash flow + capital gains

Pension funds and large institutions have long shown strong appetite for multi-family property portfolios across North America. Offering stable, inflation-hedged cash flow and low vacancy rates, multifamily real estate provides a reliable, low-risk asset class that meets their need for predictable, long-term returns. Key drivers include:

• Stable, Inflation-Protected Income: Contractual rents with annual adjustments help preserve real value.
• Demographic Support: Rising housing costs and population growth sustain high rental demand and low vacancies.
• Defensive Nature: Housing demand remains steady even in economic downturns, unlike office or retail properties.
• Tangible Asset Security: Physical assets provide stability and lower volatility compared to public equities.

The table below highlights recent major multifamily transactions involving pension funds and institutional investors:

Pension funds view multi-family/student housing portfolios as “bond-like” investments that generate steady income and capital appreciation

Major institutional investors (pension funds, private equity) are spending billions to acquire large portfolios of residential rental properties

These transactions indicate Price-to-Revenue multiples in a tight range of 12.5x–14.4x, while Price-per-Unit ranged more broadly, from roughly US$92k to US$348k

GEC’s Student Housing Portfolio

14 student housing buildings in the Greater Vancouver area, including eight operating and six under development

Unlike conventional rentals, GEC’s student housing includes fully furnished suites, kitchenware, bedding, all utilities, Wi-Fi, 24/7 security, weekly housekeeping, community events, and flexible lease terms ranging from 90 days to 12 months

Provides housing for students from 95+ institutions in Metro Vancouver, and over 70 countries, with Canadians comprising more than 40% of residents

Operating Projects

Eight buildings across six projects totalling 1,200+ beds. GEC holds minority interests and acts as project operator across all properties

These projects have potential to generate $20M in revenue, and $14M in NOI, or $12k/bed in NOI per year. These projects were appraised at $244M in 2024

Using the current 4% average cap rate for Vancouver multi-family properties, we value these projects at $205M — a simplified estimate based on a uniform cap rate across all assets

Development Projects 

GEC is simultaneously advancing six buildings across four projects, totaling 2,988 beds, and $48M in projected NOI, or $16k/bed per year. Using the current average cap rate of 4%, we believe these projects would be valued at approximately $1.2B upon completion

Management is aiming to complete these projects by 2027-2030; although these timelines are reasonable, we note that real estate development projects are often subject to permitting/financing delays

Of particular note is GEC’s Education Mega Centre (EMC) project, a $330M+, 49-storey mixed-use tower in Surrey, B.C. with 1,380 fully furnished rental units for students and education staff. The company recently partnered with Pure Group, a Canadian real estate firm with a strong track record in development and profitable exits, including the 2019 sale of Pure Multi-Family REIT for $1.6B. Pure Group will manage development, financing, construction, and asset management, while GEC operates the facility under its GEC brand. In June 2025, the project secured rezoning and development permit approvals, marking a key milestone toward construction.

Vancouver Student Housing Outlook

Vancouver is the most expensive rental market in Canada. After rising 25% between 2020 and 2024, rents have begun to ease, with a 6% YoY decline as of July 2025

While rental vacancy rates in Vancouver have been edging up, they remain well below those in other major Canadian cities. Vacancies for affordable units—below $1,750, GEC’s target market—are especially scarce, holding between just 0.4% and 1%.

Affordable rental units continue to face extremely low vacancy rates. Despite immigration slowdowns, Vancouver’s rental market remains resilient due to strong domestic student demand, and ongoing population growth

We maintain a positive outlook on Vancouver’s multi-family and off-campus student housing markets, expecting rents to remain stable or increase due to strong underlying demand. Key factors include:

• Immigration & Student Caps: While Canada’s reduced immigration targets and a 35% cut in international student permits for 2025 may slow overall growth, operators like GEC benefit from a large base of Canadian students.
• Rental Market Trends: The CMHC expects easing rental conditions through 2025 with new supply entering the market, but student and affordable housing demand remains robust, with vacancy rates under 1%, supporting 2–3% rent growth through 2027.
• Housing Affordability: High home prices and mortgage rates continue to push households towards renting.

Despite immigration slowdowns, Vancouver’s rental market remains resilient due to strong domestic student demand, and ongoing population growth

• Economic & Population Growth: Metro Vancouver’s population is projected to grow 1.2% annually over the next decade, adding 100,000+ residents by 2035. BC’s strong job market, with over 1.1 million openings forecasted through 2034, further supports rental demand.
• Rent Control: While rent controls in B.C. can deter investment in multi-family rental development, their impact on student housing is limited.
• Rental Supply vs. Demand: Vancouver currently has around 150,000–160,000 rental units. Annual net demand of 3,000–5,000 units is expected over the next 10 years, while recent completions average 2,000–3,000 units per year—suggesting continued supply pressure that will keep rents support

Current rental supply is not keeping pace with forecasted demand, which supports steady rent growth over the next decade

Financials

Debt-to-capital is above the sector average (59% vs. 46%) but should improve as SSC sale proceeds will be used to reduce debt and interest expense in FY2026

Source: FRC / Company

FRC Projections and Valuation 

GEC’s EV/R exceeds that of education management peers but remains below real estate peers, while its EV/EBITDA is lower than both groups

Relative to REITs, GEC is trading at 6x forward revenue and 8x forward EBITDA vs sector averages of 12x and 20x, a 56% discount

We are resuming coverage with a BUY rating, and a fair value estimate of $1.22/share. GEC’s strategic exit from its flagship education business and sharpened focus on off-campus student housing marks a pivotal shift. With a leaner cost structure, a growing rental portfolio valued at up to $1.4B (excluding potential acquisitions), and strong fundamentals underpinning Vancouver’s student rental market with limited to no competition, we believe GEC is well-positioned for institutional interest. 

Risks

We believe the company is exposed to the following risks: 

• Real estate development and financing
• Potential for delays in project development and construction
• Cost overruns
• Permitting 
• Profitability is highly dependent on the health of the rental market in Vancouver
• Vacancy and rental rate fluctuations 
• Leveraged balance sheet

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