Chicago — Scion Student Communities has purchased a 24-property student housing portfolio containing 13,666 beds across 18 states for $1.1 billion. The portfolio involves 20 leading national universities.
The transaction also includes the recapitalization of two communities previously owned by Scion-affiliated private syndications. Five different Harrison Street Real Estate Capital funds owned the properties in partnership with multiple operators.
Chicago-based Scion Student Communities is a joint venture between the Scion Group, GIC and Canada Pension Plan Investment Board (CPPIB). The portfolio contains a mix of recently developed Class A properties in primarily Tier 1 university markets, as well as select value-added assets.
“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,” says Hilary Spann, managing director and head of U.S. real estate investments for CPPIB.
The properties include Atmosphere, a student housing community located two blocks from the University of Arkansas in Fayetteville; 8N Lofts, located near the University of Nebraska in Lincoln; Annex, located near Miami University in Oxford, Ohio; Lux on Capitol, located near IUPUI in Indianapolis; and Venue at Dinkytown, located near the University of Minnesota in Minneapolis.
“This portfolio is much different than what we’ve bought in the past in that it really runs the gamut between brand new, Class A-plus trophy assets to some properties where we intend to do very significant value-add,” says Robert Bronstein, Scion’s president. “In fact, we’re planning on the most in-depth value-add rehabilitation that we’ve ever done in the history of our company on some of these properties.”
The portfolio contains five properties from Trinitas, according to Bronstein, which was the single largest seller aside from Harrison Street. “We have a high regard for Trinitas and what they do,” he says. “We like the markets, we like the quality — they’re great and have been very accommodating with the transition, which is important to us.”
Peter Katz, executive managing director of Marcus & Millichap’s IPA Student Housing Division, provided strategic consulting to Harrison Street on the transaction.
Harrison Street sold an additional nine-property student housing portfolio to Scion this past March for $465 million. These assets were within a larger 11-property portfolio the JV acquired from four different owners. This portfolio contained a total of 5,000 beds at eight universities.
Scion Student Communities notes it plans to pursue additional opportunities to acquire high-quality student housing assets in Tier 1 university markets in the U.S. The company’s national portfolio now includes 73 student housing communities in 52 markets totaling 46,555 beds. The average age of the properties is less than five years, and more than 70 percent of the assets are situated within one mile of their respective campuses.
“We’re looking to continue to grow and to be able to get our hands on, and on-board significant portfolios,” continues Bronstein. “A large deal like this with a lot of assets and moving pieces, as you can imagine, is a big investment of time and resources — and when you start getting real, a lot of money — and there is a lot of mutual trust and respect between us and Harrison Street.”
“We started working on this transaction in May, and it took seven months to get done,” he continues. “You can only do that if you respect and trust the people on the other side.”
Scion Student Communities has completed more than $4 billion of U.S. investments since its inception in January 2016. This was primarily achieved through four significant portfolio transactions where about $1.4 billion in equity capital was deployed. CPPIB and GIC each own a 45 percent interest in the newly acquired portfolio, while Scion Group owns the remaining 10 percent.
Scion Group is the United States’ largest privately held owner/operator of student housing communities. Its current portfolio includes 90 properties and 58,500 bedrooms, plus management of two university-affiliated communities with an additional 2,200 bedrooms.
GIC is a global investment firm with more than $100 billion in assets under management. Established in 1981 to secure the financial future of Singapore, the firm manages Singapore’s foreign reserves.
CPPIB is a professional investment management organization that invests the funds not needed by the Canada Pension Plan to pay current benefits on behalf of 20 million contributors and beneficiaries.
— Nellie Day and Katie Sloan