Henderson Global Investors has launched its first dedicated US student housing fund. According to sources, the London-based asset management firm is raising $200 million on behalf of its Henderson Student Housing Fund. A first close for the vehicle is anticipated in the third or fourth quarter of this year, and a final close is expected sometime in the middle of 2014. Representatives from Henderson declined to comment.
Through the core-plus fund, the firm will target already-built properties associated with public universities with a minimum of 15,000 students. Henderson also will put an added focus on schools with Division I sports programs, such as football or basketball.
One of Henderson’s investment criteria for the fund is that less than 25 percent of the housing that’s provided for the university will be ‘by-the-bed’ or ‘purpose-built’ housing. The vast majority of the investments will be in off-campus properties that are within walking distance of the university.
Through the fund, Henderson is looking at two strategies: to invest in properties with joint venture partners and to invest 100 percent in the properties while using a third-party manager to run the day-to-day operations of the assets. Henderson, which is targeting 50 percent leverage, has not yet made any investments on behalf of the fund.
Henderson previously has invested in the student housing sector via two separate accounts. The firm also has invested in student housing on behalf of its multifamily funds.
As PERE previously reported, the student housing sector has been showing strong and steady growth in the US over the past few years. A report by Jones Lang LaSalle noted that the US is one of the most attractive markets for the space, with investments in 2012 reaching roughly $2 billion. Fundamentals, which include low supply and high demand, have delivered average returns between 11 percent and 15 percent. And, according to the US Department of Education, enrollment at public universities has grown while the existing supply of on-campus housing has failed to keep up.