GIC JV buys US student housing portfolio for US$1.1 billion

THE joint venture formed by Singapore sovereign wealth fund GIC, the Canada Pension Plan Investment Board (CPPIB) and The Scion Group has acquired a student housing portfolio in the United States for approximately US$1.1 billion.

The portfolio consists of 24 assets located in 20 university campus markets across the US, comprising 13,666 beds.

The transaction includes the acquisition of 22 properties from affiliates of Harrison Street Real Estate Capital and the recapitalisation of two communities previously owned by Scion-affiliated private syndications.

CPPIB and GIC each own a 45 per cent stake in the newly-acquired portfolio and Scion owns the remaining 10 per cent.

"As a long-term investor, we are pleased to acquire this quality portfolio with good cash yields. We remain confident in the student housing sector, and in our partnership with Scion and CPPIB which has enabled us to scale-up quickly our US student housing portfolio," said GIC Real Estate chief investment officer Lee Kok Sun.

"We will continue to work closely with our partners to pursue value opportunities in the US."

The joint venture has completed more than US$4 billion of investments since its inception in January 2016. Its portfolio now includes 73 student housing communities in 52 university markets, comprising 46,555 beds. The average effective age of the portfolio is less than five years and over 70 per cent of the assets are located within one mile of their respective campuses.

The joint venture will continue to pursue opportunities to acquire high-quality student housing assets mainly in tier-1 university markets in the US, it said in a press statement on Wednesday.

"This transaction is particularly strategic, providing for the addition of six properties in markets in which our joint venture already has a presence. This is consistent with our strategy to concentrate our investments in targeted markets by owning multiple properties with diverse product types and rental price point options," said Scion president Robert Bronstein.

Hilary Spann, who heads CPPIB's real estate investments in the Americas, said: "This is a compelling investment opportunity to efficiently build further scale in the US student housing sector with a portfolio of high-quality, well-located properties in new and existing joint venture markets.

"We believe the secular strength of the US student housing sector will continue to deliver attractive risk-adjusted returns for the CPP Fund, and we look forward to continue growing the joint venture with GIC and Scion."