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UBS AM, Townsend back CA Ventures’ open-end student housing fund – Exclusive

The Chicago-based manager is targeting a raise of $1.5bn in initial equity for the vehicle in the first three years.

Chicago-headquartered real estate investment manager CA Ventures is in the market with its debut open-end student housing-focused fund. It is one of the first managers to launch a perpetual life structure focused on a single, niche strategy.

CA Student Living Income and Growth was officially launched in August, according to a Form D SEC filing. Sources close to the fundraising have told PERE the firm is targeting a $1.5 billion equity raise in three years, following which the fund will close to new investors for a certain period, like most open-end structures.

The source also told PERE that UBS Asset Management and the Townsend Group are the seed investors in the fund. Specific commitments made by the two firms are not known. CA Ventures declined to comment on the fundraising, but PERE understands that Evercore is helping to raise capital from institutional investors for this vehicle.

The capital raised for the fund will be invested in institutional quality student housing assets in tier-1 public and private universities in the US. According to the source, the fund will mostly target core assets and limit development and value-add investments to 15 percent of the fund’s total capital. Gross levered annual IRRs of 8-9 percent are expected from these investments.

Within the broader multifamily sector, London-based Nuveen Real Estate is another firm that recently launched an open-end real estate fund for a single sector. This February, the firm raised $450 million in the first close of the US Cities Multifamily Fund, a vehicle to be invested in core multifamily assets.

CA Ventures has a portfolio of $8.7 billion in assets across the US, Europe and Latin America. CA Student Living, the firm’s dedicated student living business, has more than 20,000 beds across 43 assets in 34 university markets. Its joint venture investor partners include QuadReal, the real estate company owned by Canadian pension plan bcIMC, that invested $600 million in a student housing JV with CA Student Living and San Francisco-based investment firm GI Partners in 2017.

The growing number of student housing-focused partnerships and fund launches is being driven by the burgeoning growth of the sector as an investment property type in the US. According to real estate research firm CBRE, annual student housing investment volume reached $11 billion last year, more than tripling since 2014. And institutional capital represents a growing share of the buyers of student housing assets. In early 2018, investment managers, REITs and cross-border investors accounted for 50 percent of all acquisitions in the sector, according to data provider Real Capital Analytics.