The student-housing sector experienced a mega deal for this commercial real estate asset class earlier this month that’s indicative of the sector’s strong overall transactional performance.
Mapletree Investments, a Singapore sovereign-wealth fund, acquired a student-housing portfolio for $1.6 billion from Kayne Realty Advisors. The transaction totaled 18 properties across the United States and Canada.
The deal is indicative of how institutional investors are starting to show more interest in a sector dominated more by private firms.
This is on top of a trend that has been building. There was $10 billion spent on student-housing transactions last year, the largest ever on record, according to an ARA Newmark Student Housing Group report cited by Bisnow. Student housing has been favored in the past during downturns in the economy, but that’s not the kind of climate we are currently facing. And like other commercial real estate sectors, investors are getting priced out of class A properties and going for value-added plays.
And the Mapletree deal is just the latest in a series of events that mushroomed last year, when 21 percent, or $2 billion, of all student-housing transactions completed were buys by foreign entities. That equals more than what was thrown down combined during the prior decade, according to ARA.
Movement is strong on the development end as well.
In May it was announced that a joint venture between QuadReal Property Group, CA Student Living and GI Partners intends to develop $600 million in student housing across the country. That deal was kicked off with an existing four-property portfolio and six assets in development in major college towns across the country.
And just as the new wave of tech-influenced offices, many new student-housing developments are “creative.”
In Champaign, Ill., home of the University of Illinois, American Campus Communities is building a luxury development called The Suites at Third. In addition to the high-tech and recreational attractions in the facility, American Campus is shooting for LEED gold certification for the building, which would mark it as a top-notch eco-friendly asset.
Meanwhile, in Orlando, a $90 million student-housing development is proposed for the University of Central Florida and Valencia College, which share a campus. This project will be the anchor of a $1-billion Creative Village underway in the city, which will total 68 acres, including offices, retail and other types of residential units.
So, student housing’s place in the overall commercial real estate industry seems to be changing. Serious investors are taking note, and while other sectors need to temper development in the face of overbuilding, it doesn’t seem like the same is happening in student housing.