Alignvest Management Corporation announced it has launched Alignvest Student Housing Real Estate Investment Trust (ASH REIT), an investment vehicle focused exclusively on consolidating the highly-fragmented Canadian Purpose-Built Student Accommodation (“PBSA”) real estate sector.
ASH REIT has launched with over $65 million of capital commitments. Together with access to substantial additional capital from Alignvest and proceeds raised from subsequent offerings, ASH REIT is well-positioned to acquire high quality PBSA assets and quickly become the largest owner/operator in Canada.
“We are pleased with the response of so many investors across Canada who share in our enthusiasm for ASH REIT,” said Drew Coles, Chair of the Board of Trustees of ASH REIT. “We feel positive about surpassing our initial target for the fundraise. This is a testament to the strength of the strategy, our experienced management team and the attractiveness of our offering.”
Alignvest believes there is a unique and attractive opportunity to invest in the PBSA sector in Canada and to become the leading owner/operator of student accommodation properties in Canada. Canadian post-secondary student population growth is greater than many of its global peers, driven by recession-resistant domestic and international student growth. The limited funding available to Canadian universities is decreasing their ability to provide additional beds to service the increase in demand. As a result, there is a unique market opportunity to acquire, build and operate high-quality, institutional-grade PBSA assets across Canada.
ASH REIT is scheduled to close on the purchase of its first PBSA asset at 181 Lester Street in Waterloo, Ontario, in July 2018. This asset is a 455-bed (18-storey) high quality purpose-built building that is over 98 per cent leased for the upcoming school year, and strategically located between the University of Waterloo and Wilfrid Laurier University.
Reza Satchu, Managing Partner of Alignvest said: “We are excited to bring this investment strategy to Canadian Investors. The low-risk and low market correlation of the strategy combined with the unique upside of the Canadian PBSA market presents an attractive risk/reward proposition for investors.”
ASH REIT will seek to generate attractive returns to investors in what the Trustees and management of ASH believe is a low-risk student housing sector by: (a) acquiring high-quality, newly-built, operating assets in attractive student housing markets; (b) taking advantage of its early-mover position to consolidate the industry at attractive purchase prices; (c) improving the underlying operations of purchased assets; (d) maximizing economies of scale and creating operational savings by integrating the operations of assets; and (e) consolidation and internalization of property management to enhance long-term margins and maximize value realization for investors.
ASH REIT expects to generate returns to investors from both: (a) growing current income (distributed quarterly and, to the extent reasonably possible, tax deferred); and (b) long-term appreciation in value. ASH REIT is targeting an initial annual distribution of approximately 6% ($6.00 to the initial investors based on an initial closing price of $100.00 per unit) and a long-term 15% aggregate annual return inclusive of an anticipated increase in the value of the assets.