REAL ESTATE - GIC Real Estate, the real estate investment arm of the Government of Singapore Investment Corporation, has formed a joint venture with Campus Apartments to invest in the student housing industry.

There is a total of $333m of equity in the venture – with GIC contributing or $300m. Campus put in the balance, $33m or 10%. With leverage, there is a total capitalization in the venture of $1.1bn.

Campus made the decision a year ago that it needed to bring in an institutional partner to grow the company significantly. Its President David Adelman said, “At that time our company was in the size of $250m in total assets. To get to where we want to be, we needed to bring in a new capital source.”

Campus hired Deutsche Bank Securities to assist in finding the new source. There were five to six players that became interested in the venture, including pension funds and pension fund managers.

Adelman said, “We think that this venture means that more institutional investors will have a comfort level in investing in the property type of student housing on a long-term basis.”

There have been a couple of transactions already committed to for the venture. One is the development of a mixed-use project at Franklin & Marshall College in Lancaster, Pa. The project totals 200,000 square feet and will have 117 housing units, grocery store, restaurant and shops. This is a $36 million project.

The second project is at North Carolina Central University in Durham, North Carolina. This will be the development of 562 housing units. The cost of this project is around $27 million.

The investment strategy for the venture is to acquire and develop student-housing complexes that are for the most part in the eastern part of the country. The properties could be apartments or mixed-use projects located on and off campus. Graduate, undergraduate and faculty of the school will occupy them.

A typical size transaction for the venture will be in the range of $20 million to $50 million. Investment returns for the venture are pegged at a mid teens IRR. This is based on a holding period of seven to 10 years.