Kayne Anderson closes two deals, eyes eight more by end 2010

Kayne Anderson Real Estate Partners has closed two student housing deals in Kentucky and Texas – with another five to eight transactions expected to close by the end of 2010.

The New York-based private equity real estate firm, which primarily targets student housing, has teamed up with two developers and operators of public university student housing in Louisville, Kentucky and Lubbock, Texas.

In Louisville, Kayne Anderson – led by managing partner Al Rabil – has acquired an 80 percent stake in a 266-unit, 858-bed off-campus complex, developed by The Edwards Companies and close to the University of Louisville, in a deal that values the property at more than $50 million. Edwards and Kayne Anderson will also develop another site for student housing as part of the transaction.

There is a dichotomy in the market at the minute. There is a lot of capital available for companies targeting core real estate sectors, but not a lot of capital available for mid-sized companies in mid-market sectors, such as student housing. Kayne Anderson managing partner Al Rabil

In Lubbock, the firm has teamed up with Asset Campus Housing to develop 25Twenty, a 249-unit, 562-bed complex near Texas Tech University. The housing complex is expected to be complete by the summer of 2011.

Rabil told PERE Kayne Anderson is increasingly looking to form alliances with student housing developers and operators, as it deploys its $136 million Kayne Anderson Real Estate Partners I, which closed in March 2009. The fund is roughly 50 percent invested with expectations it will be 80 percent invested at the end of the year, with five to eight more deals expected to close by the end of 2010.

“There is a dichotomy in the market at the minute. There is a lot of capital available for companies targeting core real estate sectors, but not a lot of capital available for mid-sized companies in mid-market sectors, such as student housing,” Rabil said. “This is an area that’s always been attractive to us, but there isn’t much capital. We’re looking for these deals to be the first of many as we’re looking to form ongoing relationships.”

Rabil expects enrollment at public universities across the US to increase over the coming decade, however there has been little development for the past two years. “You are getting some development now but it doesn’t come close to keeping up with enrollment growth.”