ING Real Estate Community Living Fund has bought two off campus student apartment complexes in Florida student from a local developer operator for $US36.45 million (approximately $A48 million).
The acquisition price is a 10% discount to valuation and will provide an initial yield of 7.4%.
The two properties include The Preserve at Tallahassee and Campus Club Apartments in Tampa, located in Florida, USA.
The Preserve at Tallahassee was built in 2003 and has 190 units totalling 570 bedrooms and is located on 36.2 acres, less than three miles from Florida State University and one mile from Tallahassee Community College.
While the Campus Club at Tampa was completed in 2005 and has 64 units totalling 256 bedrooms and is located on 5.4 acres, just one mile from the University of South Florida.
Both properties enjoy occupancies of around 95%, in markets that have experienced similar levels of occupancy over the last three to five years. The near term outlook for these markets is for continued healthy conditions.
The acquisition is the third portfolio to be sourced off market by the fund’s alliance with US based Rabil Properties.
Both Florida State University and the University of South Florida are expected to increase enrolments by 2-4% per annum over the next five years, with Tallahassee Community College expected to expand more rapidly.
According to ING, Florida is forecast to have the fourth fastest growth in student enrolments in the US, over the 10 year period from 2001 to 2010.
As part of the agreement, the vendor will manage the assets in the short term to allow an effective transition to Greystar, who is one of the largest student accommodation operators in the South-east with 15,908 units under management.
ING Real estate Investment Management Australia chief executive Hugh Thomson said the acquisitions will improve the fund’s earnings and growth prospects.
In addition, he added the acquisition will geographically expanding the fund’s student portfolio into the US market, introducing a new operator and diversifying the overall portfolio with two more good quality investment assets.
ILF’s chief executive Ian Muir said on completion of these acquisitions and the current development pipeline, the Australasian weighting of the fund will be 28% and the student housing component will be 27%.
The fund will have 98 properties in total, with a gross asset value of $A866 million.
The acquisition will be fully debt funded.
By Adam Parsons