Kayne Anderson closes student housing deal, eyes more

As it closes the acquisition of 228-unit off-campus property in Kentucky, the Armonk, New York-based firm could deploy up to $200m of equity this year.

Kayne Anderson Real Estate Advisors could deploy up to $200 million of equity in 2011 in the wake of closing a $40 million deal to buy a student housing complex in Kentucky.

The Armonk, New York-based firm purchased the 740-bed property, known as 5 Twenty Four Angliana, in Lexington, Kentucky, from Orlando developer Progressive Capital Group. KAREA, the private equity real estate arm of alternatives investment manager Kayne Anderson Capital Group, declined to comment on financial details, but the transaction is believed to be valued at $40 million.

Meanwhile, KAREA is believed to be eyeing a spate of deals for 2011, with expectations it could deploy between $150 million and $200 million of equity in the next 12 months.

Chief executive officer Al Rabil previously told PERE that the development of new student housing properties at or near public universities in the US had failed to keep pace with the increasing enrollment rate. “You are getting some development now, but it doesn’t come close to keeping up with enrollment growth,” he said last May.

The latest deal follows October’s acquisition of a portfolio of nine off-campus student properties from REIT Education Realty Trust for $84.8 million. The ERT transaction included more than 1,008 units, or 3,793 beds, close to seven public universities in Alabama, Georgia, Kentucky, South Carolina and Tennessee.

At the time of the deal, ERT said the transaction would be split into two closings, with four student housing communities to be sold to KAREA by the end of 2010 for $38.7 million and the remaining five to close in the first quarter of 2011. KAREA is expected to close on the final five properties, valued at $46.1 million, this week. ERT added that the average age of the properties was 11 years and, as of the end of September, were 95 percent occupied with an average monthly rental rate of $358.