by Sean KingFebruary 9, 2021

Client Snapshot

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  • Global Student Accommodation Group

    United Kingdom

  • Portfolio Growth

    27 U.S. Properties with 8,000 beds

  • Project Type

    International Transaction

  • Project Objective

    Completed Transaction with Effective Treasury Management

Global Student Accommodation Group

Global Student Accommodation Group (“GSA”) is the international leader and pioneer in student accommodation. Established in 2013, the management team started with just over 100 beds in the UK and now operates in Europe, the Middle East, Asia Pacific, and the United States. GSA’s vision is to expand and improve the scale, reach, and quality of student accommodations across the world.

The Challenge

Predominately working in Europe, the Middle East and Asia Pacific, GSA was presented with the opportunity to acquire 27 properties in the United States. These properties span across 18 state and would add nearly 8,000 beds to GSA’s existing portfolio. Considering this was GSA’s first expansion into the United States, the company assembled a team of advisors to assist with the legal and tax implications of the transaction.

McGuire Sponsel’s international transactions team was engaged to assist with the inbound tax and legal entity structuring portion of the project. McGuire Sponsel worked alongside GSA and other counsel to determine the most efficient corporate entity structure at the time of acquisition and on a going forward operational basis.

In this specific situation, the ultimate investor group was resident in a jurisdiction that does not have a tax treaty with the United States. This fact compounded an already challenging transaction such that any effectively connected income with a U.S. trade or business would be subject to a federal corporate tax rate of 21%. Further, the same income would then be subject to a second level of taxation upon any dividend distribution to the investor group, which would impose a 30% withholding tax. GSA’s exposure to such a significant effective rate of would have an immediate commercial impact on the viability of the transaction itself, including GSA’s ability to successfully bid on the underlying bundle of properties.

Results

McGuire Sponsel’s international transactions team conducted extensive analysis to develop an acquisition and going-forward operational structure that would not only allow the transaction to proceed but would also enable GSA to successfully and efficiently operate an 8,000-bed portfolio for many years to come. By creating a unique and substantive holding company structure, McGuire Sponsel was able to significantly reduce GSA’s effective global tax rate and allow for substantially more efficient treasury management throughout GSA’s group of legal entities. This efficient structure now enables GSA to avail of tax treaty benefits, reduced withholding taxation, elimination of branch profits tax and free movement of cash across borders. Ultimately with the guidance and collaboration of McGuire Sponsel’s international transactions team, GSA was able to acquire the 27 properties in a truly landmark transaction that has fundamentally changed the student housing industry in the United States.

GSA expressed their gratitude to the McGuire Sponsel team by noting that “GSA successfully completed this transaction with the expert advice of McGuire Sponsel and we are truly grateful for the support.”

  • 27 New Properties

    Portfolio Growth