10 Dec 2024

Investcorp, a leading global alternative investment firm, today announced that it has completed four student housing acquisitions totaling nearly 3,000 beds for a gross transaction cost of over $300 million. The investments strengthen Investcorp’s student housing presence in key college markets and advances the firm’s strategy to build a diversified portfolio of off-campus housing at flagship state universities across the country. The acquisitions include:

• A 792-bed, 99%-occupied property at Texas A&M University in College Station, Texas;
• A 486-bed, 98%-occupied property at Texas State University in San Marcos, Texas;
• A 699-bed, 96%-occupied property at the University of Kentucky in Lexington, Kentucky; and
• A 684-bed, 99%-occupied property at the University of Oklahoma in Norman, Oklahoma.

“The student housing sector continues to perform well, and we believe the robust fundamentals of this asset class will translate into strong performance and compelling risk-adjusted returns for investors,” said Michael O’Brien, Global Co-Head of Real Assets for Investcorp. “Many of the top university markets face shortages of housing, and when combined with growing enrollment, this creates favorable operating dynamics which support our long-term conviction in the asset class. These dynamics are helping to drive sustained and rising demand that reinforces our long-term conviction in the asset class.”

Nationally, the student housing sector has seen strong performance this academic year, with steady tenant demand and rent growth averaging nearly 5% across the top 200 university markets, which is above the long-term average, according to Yardi. In addition, high interest rates, disrupted capital markets, and land scarcity near major universities have contributed to a significant slowdown in new construction, which is expected to sustain favorable supply/demand dynamics and stable long-term cash flows.

Ryan Bassett, Investcorp’s Head of US Residential Acquisitions, stated, “This portfolio was aggregated in four individual transactions and underscores Investcorp’s ability to target stable assets located at the best large public universities in the US. We have developed robust business plans for each asset to improve the properties over time, and have long-term conviction in each university’s continued enrollment growth.”

Investcorp has deep experience in the student housing sector, having owned and managed approximately 20,000 beds across roughly 30 investments. The firm’s US real estate strategy invests primarily in the industrial and residential sectors, which collectively represent 98% of the firm’s US real estate portfolio. In 2024, the Investcorp real estate team ranked 51 on PERE’s PERE 100, one of the most prominent rankings of real estate equity investment managers in the industry. Since 1996, Investcorp Real Estate has acquired approximately 1,400 properties for a total value of over $26 billion and currently has approximately $11.2 billion in global real estate assets under management.