Core Spaces Aligns with Goldman Sachs in $600 Million Recapitalization Deal

Chicago — Student housing developer Core Spaces has created a partnership with Goldman Sachs to recapitalize and develop a portfolio of nine properties valued at $600 million. The portfolio consists of seven operating student housing properties and two projects under development, totaling 4,358 beds. The deal comes as a strategic decision by Core to aggregate its portfolio and have an interest in its developed properties for the long term, says Core’s founder and CEO, Marc Lifshin.

“We believe in the long-term performance of our assets,” he says. “Our assets have proven to perform over time. We would rather be involved for the growth period; it creates a much more sustainable model for us going forward.”

The operating properties that are part of the deal include several that opened in fall 2018: Hub Orlando(745 beds); Hub Tuscaloosa (486 beds); and State Tuscaloosa (174 beds). They also include four properties opened for occupancy this fall: Hub Tuscon III (186 beds); Hub West Lafayette (608 beds); Hub Lexington Upper (492 beds); and Hub East Lansing (577 beds). In addition, the deal includes two properties under development, OLIV Tucson Main Gate (605 beds) and Hub Tucson Park Avenue (485 beds). TSB Capital Advisors assisted both parties with the deal.

“TSB Capital has been working strategically with Core Spaces to find the right partner for a long-term ownership model — and with Goldman Sachs, we found the perfect fit,” says Timothy Bradley, founder and principal of TSB Capital Advisors. “Both companies are best-in-class and we expect the joint venture to continue its growth in 2019 and beyond.”

Core Spaces has previously sold portfolios of its urban infill properties post-development, including the sale of a 3,776-bed portfolio to American Campus Communities for $590.6 million in 2017. The venture with Goldman Sachs will allow Core Spaces to retain an ownership interest in the properties, and keep the properties under management.

Lifshin hinted that his company’s deal with Goldman will likely be the beginning of a long relationship between the two companies.

“We are looking at some different opportunities with Goldman for the future; this is not just a one-off transaction,” he says. “In terms of how this deal is structured, it is a big picture relationship.”

For Goldman, the strategic relationship with Core allows the investor a larger presence in the student housing sector, as well as a pipeline of core product. For the student housing industry, the deal continues the trend of a further presence by institutional investors in the sector. 

“We continue to see strong fundamentals for student housing investment in select university markets across the United States,” said Peter Weidman, a partner in the Real Estate Principal Investment Area within the Goldman Sachs Merchant Banking Division. “We are excited about our partnership with Core Spaces as we look to continue the growth of our student housing platform with a best-in-class partner.”