PGIM Real Estate has provided $108.5 million in financing to a fund managed by Morgan Stanley Real Estate Investing and Global Student Accommodation on the recent acquisition of a five-property student housing portfolio.
The fixed-rate loan is backed by properties totaling 548 units with 1,619 beds supporting universities in Austin, Texas; Flagstaff, Arizona; and Charleston, South Carolina.
The financing restocks Morgan Stanley and GSA for further purchases in student housing, which continues to attract investor attention.
“The deal is well aligned to our long-term debt strategy and provides an optimal source of financing for this recently acquired portfolio,” John Jacobs, global head of capital markets for GSA, said in a statement. “The transaction has unlocked capital to further invest in our existing student-housing portfolio, while growing our footprint in the region through targeted acquisitions.”
Student housing set an all-time high in transaction volume for 2022 with an annualized total of $18.9 billion, significantly surpassing the previous year-end high of $11.5 billion in 2021, according to JLL.
“The fundamentals of student housing have never been stronger, which is why capital is flocking to the asset class,” JLL said in a report this week. “Institutional investors are steadily increasing their total allocations, accelerating capital flows to the sector.”
Following the broader multihousing market, the student housing sector is building its highest levels of new supply in the Sun Belt markets, according to JLL. The top markets for student housing include Austin and South Carolina, the brokerage said.
The five student housing properties support three colleges in the U.S. Sun Belt:
- The University of Texas properties in Austin total 175 units and 613 beds in three properties built between 2016 and 2019, including Yugo Austin Corner, Yugo Austin Rio and Yugo Austin Nueces.
- The Northern Arizona University asset is located adjacent to the Flagstaff campus and is a 587-bed student housing property built in 2021 that totals 179 units.
- The College of Charleston asset is located in downtown Charleston and contains 194 units and 419 beds, and also houses the college’s main recreation center.