Ares And Scion's Student Housing JV Acquires 4 Communities For $435M

The University of Georgia

A student housing-focused partnership has locked in another portfolio purchase just as collegians have moved back to campus for the fall semester. 

In a $435M deal, Ares Real Estate and The Scion Group added 2,316 beds across four student housing communities to their roster, the companies announced Tuesday. The joint venture acquired the properties from developer Schenk+.

Ares and Scion debuted their partnership in May with the acquisition of a 12-property student housing portfolio across 10 states purchased from Harrison Street. The $910M deal is still the asset class’s largest deal of the year.

Both portfolio buys center on the Sun Belt as the fund targets off-campus student housing at universities with robust enrollment and limited supply. The communities in the latest transaction serve students at Texas State University, the University of Georgia and the University of Tennessee. May’s acquisition involved properties at the University of Florida, James Madison University in Virginia, Arizona State and Auburn University. 

A growing bifurcation in university enrollment and funding trends is benefiting investors who specialize in student housing, Mike Gordon, Harrison Street global chief investment officer, told CNBC. His eye is on Virginia Tech, Auburn University and Penn State, where the housing pipeline isn’t keeping up with student body growth.

New communities are coming online in large markets at an increasing pace, Tyson Huebner, Yardi’s director of research, wrote in its July student housing report. 

Students are preleasing off-campus housing at a faster pace this year than the last. The rate climbed to 89.1% in July, up from 88.1%, according to the analysis of 200 university markets

Smaller schools nationwide, meanwhile, are struggling with funding and are closing their doors for good, Bisnow reported in May.

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