The Abu Dhabi Investment Authority is poised to underscore its commitment to the resurging US student accommodation sector with a further $500 million equity to a joint venture partnership established in 2015.
PERE can reveal the pre-eminent sovereign wealth fund of the United Arab Emirates is close to finalizing the commitment to Landmark Properties, the Athens, Georgia-based student housing specialist. The transaction would extend a partnership that has seen the two parties amass up to $3.5 billion in gross asset value of assets across the US.
The repeat commitment is one of several made by ADIA to the partnership and is demonstrative of its current strategy of investing large amounts of equity via selected high-conviction themes it regards as long-term opportunities, a source familiar with the matter told PERE.
In its annual report published last month, the investor said its real estate department was “focused on the long-term themes it has followed in recent years by optimizing allocations to sectors, geographies and modes of access to capture future growth trends.”
It said: “In 2021, the division will maintain its disciplined investment approach. This will include an ongoing focus on platform investments in areas backed by positive structural trends, and investments associated with knowledge clusters as highly skilled workers are drawn to supply-constrained locations.”
ADIA has come under fire in recent years following multiple senior departures and few visible outlays. Indeed, according to real estate deals research provider Real Capital Analytics, ADIA has not recorded a direct investment in the last two years and has been a net seller since 2015.
The investor was knocked off the top spot on PERE’s annual Global Investor 100 ranking, published Friday, for the first time in its 10-year history. The investor ranked third with a total equity investment in real estate of $48.68 billion.
The investor is understood, however, to have made a number of real estate outlays in the listed real estate markets and at the platform level, such as this commitment to Landmark’s venture. See PERE’s in-depth analysis of ADIA’s strategic planning and external views here.
US student housing, meanwhile, has seen a recent upswing in institutional activity following a lull in investment during the coronavirus pandemic. According to data provider Statista, $12 billion was invested in the sector’s accommodation in the country in 2019, dropping to just $4.5 billion last year, the lowest volume in a decade.
However, since vaccination programs were introduced earlier this year, institutional involvement in the sector has notched upwards with notable transactions involving private real estate’s biggest managers.
In August, Landmark inked a $784 million joint venture with Blackstone’s Real Estate Income Trust to acquire and recapitalize an eight-strong, 5,400-bed student housing portfolio. In the same month, rival manager Brookfield was reportedly in advanced talks with another specialist Scion Group to acquire more than $1 billion of assets in what would be the Toronto-based manager’s first US student housing transaction.
Neither ADIA not Landmark Properties would comment for this article.