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