TIAA to plough $250m into US student housing sector

TIAA Global Asset Management is looking to increase its exposure to US student housing.

The group, which has so far invested $50m (€45.5m) in the sector, plans to invest up to $250m.

John Panagakis, senior managing director and head of global private distribution, told IPE Real Estate: “We are investing in student housing currently and plan to make big commitments to the sector.

“Right now, we see an opportunity to invest $200m-250m, and we are in the process of transacting several deals.”

The transactions are being completed with partners, with TIAA also in talks with other investors interested in the sector.

“We see student housing as part of a multi-family housing sector,” Panagakis said.

He said student housing had become an increasingly attractive investment due to demand for accommodation from a growing number of Asian students.

“Australian investors are saying to us ‘How can we get into the market?’” said Panagakis, who is meeting institutional investors and pension funds in Australia.

He said the sector offered investors long-term opportunity, and that it worked on a different cycle to other segments of the property market.

So far, TIAA has made two acquisitions in the US student housing sector.

The investor bought 33º North, a 427-bed student housing complex located next to the University of North Texas, and also formed a joint venture with Pierce Education Properties to buy The Lodge, offering 576 beds at Purdue University in Indiana.

TIAA, which has managed student housing investments on behalf of clients over the past two decades, has a number of multi-family housing properties that serve student populations in the US.

The sector is fast gaining favour with institutional investors, with transactions totalling $5.5bn in the US alone in 2015, according to CBRE.

The figure does not include the sale in January of the Scion Group to Canada’s CPPIB and Singapore sovereign wealth fund, GIC, for $1.4bn, or the $1.9bn takeover of the listed Campus Crest Communities.

Private equity group Harrison Street Real Estate Capital finalised the acquisition this month and plans to take the REIT private.

Panagakis said many US REITs were trading at a discount and presented an opportunity for privatisation.

He is part of a team of senior TIAA executives visiting Australia to promote the new “holistic” investment approach now being adopted by TIAA, following its name change from TIAA-CREF to simply TIAA last month.

In particular, TIAA is promoting its long-term interest and expertise in the management of agriculture – timberland, agribusiness and farms – while in Australia.

Along with its two partners in agribusiness and timber – AGR Partners and Greenwood Resources – TIAA’s team is in Australia to educate super funds on the long-term potential offered by these two sectors.