Virtus Real Estate Capital, a real estate private equity firm, has launched Virtus Student Housing, LP, its newest fund. Virtus is slated to acquire more than USD300 million in student housing interests in 2011 and 2012.
The new fund seeks to leverage and capitalise on demographic trends, increased student enrolment in colleges and the fragmented nature of the student housing asset class. The new Virtus Student Housing fund represents the 34th investment partnership from the firm.
“Our focus on investing in real estate asset classes whose demand is driven by major demographic trends has historically provided greater resilience to economic downturns than traditional asset classes, and it shows in the performance of our assets during the most recent downturn,” says Terrell Gates (pictured), Chief Executive Officer and Founder of Virtus. “We expect the same kind of resilience from our student housing fund if there’s another downturn.”
The student housing fund will deploy between USD100 million and USD150 Million in equity, preferred equity and mezzanine investments within this historically resilient asset class. The fund will acquire student housing properties in collegiate markets located in high-density urban areas, near tier two universities and major community colleges throughout the US.
Outside of traditional real estate asset classes, Virtus seeks investments it considers to be resistant to economic and capital market forces such as self-storage, student housing, senior housing and medical office.
Over the last several years, Virtus has been highly active, acquiring over 40 self-storage facilities throughout the US.
Virtus develops its investing strategy emphasising the role of specific demographic trends which include: the ageing and growth of the Baby Boomer Generation; the coming of age of the Millennial Generation; the growth of the Hispanic market in the United States; and the transitory nature and decreased job tenure of the American worker.
In addition to this demographic focus, Virtus targets asset types with fragmented ownership and income streams that are historically more robust than traditional real estate asset classes and other income oriented investments.
Since 2003, Virtus has purchased 110 properties with an acquisition price of more than USD1.6 billion throughout the US by partnering with best-in-class real estate operators who are domain experts in their specific real estate asset classes.
“According to recent reports, US college enrolments are increasing dramatically with approximately 18,700,000 college students in the US in 2011, and the trend is expected to continue making the student housing market ripe for private investment,” says Jeffrey Schneider, Director of Capital Investment, Virtus.
“With shrinking state and university budgets, many colleges are looking to the private sector to supply their housing needs as they focus more limited funds on academics. We’re primed to take advantage of this expanding opportunity,” says Schneider.
