The Canada Pension Plan Investment Board has invested a further US$1.1 billion in its U.S.-based student housing portfolio.
As part of its joint venture with global investment firm GIC Private Ltd. and the Scion Group, a U.S. owner and operator of student housing communities, the pension fund has acquired 24 new assets across 20 campuses.
“This is a compelling investment opportunity to efficiently build further scale in the U.S. student housing sector with a portfolio of high-quality, well-located properties in new and existing joint venture markets,” said Hilary Spann, managing director, head of Americas, real estate investments at the CPPIB, in a press release. “We believe the secular strength of the U.S. 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.”
Read: CPPIB invests in three U.S. student housing portfolios
Since its 2016 inception, the Scion Student Communities joint venture has completed more than US$4 billion of investments, primarily through four significant portfolio transactions in which about US$1.4 billion in equity capital was deployed. CPPIB and GIC each own a 45 per cent stake while Scion holds the remaining 10 per cent. It totals 73 student housing communities, covering 52 university markets.
“As a long-term investor, we are pleased to acquire this quality portfolio with good cash yields,” said Lee Kok Sun, chief investment officer at GIC. “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 U.S. student housing portfolio.”
Of the 24 new properties, 22 have been purchased from affiliates of Harrison Street Real Estate Capital, while two are recapitalizations of housing communities formerly owned by private Scion-affiliated syndications.
“This transaction is particularly strategic, providing for the addition of six properties in markets in which our joint venture already has a presence,” said Robert Bronstein, president of Scion. “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.”