Last July, shortly after publishing a blog series that examined the state of the Canadian student housing industry and compared it to that in the U.S. (*see links below), I met with Jonathan Turnbull of the newly created Alignvest Student Housing Real Estate Investment Trust. Alignvest had just announced the acquisition of their first purpose-built student housing asset: a class A, 18-story, 455 bed, 100%-occupied tower located in Waterloo, Ontario.
I was impressed with Jonathan’s enthusiasm. Alignvest was going to succeed where others had failed. It would consolidate best-in-class, purpose-built student housing assets and become the largest owner-operator of student housing assets in Canada. I left the meeting wishing Jonathan well. A company like Alignvest was exactly what the Canadian industry needed. Maybe they would forge an industry like such U.S. pioneers as Dinerstein, Allen and O’Hara (EdR), Capstone, Campus Apartments, GMH, and ACC.
One problem often-cited with the Canadian student market is the lack of product available to purchase. However, in the fall of 2018, Alignvest followed up its initial purchase in Waterloo with two additional high-quality purpose-built transactions at the University of Ottawa, adding an additional 860 beds to their portfolio.
Around the end of last year, I got word that there was a large student housing portfolio available for sale. Sure enough, on March 28, I received a press release from Alignvest that they were successful in acquiring the portfolio.
Alignvest’s press release (Press Release) summarizes the acquired portfolio as follows:
- King Street Tower I, Waterloo, ON: 126 units, 536 beds; 100% occupied
- King Street Tower II, Waterloo, ON: 80 units, 419 beds; 100% occupied
- West Village Suites, Hamilton, ON: 107 units, 449 beds, 12,000 sf retail; 100% occupied
- Village Suites, Oshawa, ON: 133 units, 588 beds; 95% occupied
This acquisition makes Alignvest the most active player in the Canadian market in the past 12 months and brings its total portfolio to seven properties, over 3,300 beds, and approximately $400 million in value. In the past year, Alignvest completed the largest single-asset purchase ever in the Canadian market and now it can claim the largest portfolio deal as well.
Alignvest Pushes Forward
I reached out to Jonathan and asked him to comment on this past year’s success and what’s next. The following is a summary (lightly edited) of what Jonathan told me:
“We are amazed with our progress over the past 12 months. We are excited about the first steps we took towards the much needed consolidation in the industry and the steps we have taken in bringing a level of professionalism into ownership and operations.
“When we launched our fund, we knew there was a good deal of pent-up interest among the developers to sell their buildings and recycle their capital into new projects; we just underestimated the scale of interest and the quality of the product that would be made available to us. We were forced to be selective with our capital, which is a great discipline when launching a consolidation play into the market.
“The deals have given us great insight into much-needed ‘best practices’ that we have already started to roll-out to additional properties with great initial success. The sector is poised for consolidation and improved underlying operations given the fragmented ownership to date.
“Going forward, you could say we are focused on more of the same. We remain in active discussions with owners of buildings worth over $500 million and hope to close on multiple high-quality acquisitions to increase our asset base to $1 billion within 24 months.
“We are committed to rolling out our best practices across the portfolio and plan to share with our investors some of our exciting initiatives that highlight our ability to improve long-term cash flows of acquired assets and realize local economies of scale with in-market acquisitions.
We have had an amazing first 12 months and want to maintain our momentum and continue growing our high-quality platform. “
About Alignvest Student Housing REIT
Alignvest Student Housing Real Estate Investment Trust is an open-ended real estate investment trust formed under the laws of Ontario to own income-producing purpose-built student accommodations located in Canada. The REIT is offering an unlimited number of units on a continuous basis pursuant to an offering memorandum on a private placement basis to accredited investors.
Shawn Lubic, Director – Student Housing Capital Markets, Cushman & Wakefield
With 24 years of commercial real estate experience, Shawn is a recognized expert in investment sales brokerage and financial analysis/valuation across all commercial property types. With a specialty in student housing, Shawn has extensive experience in the disposition of investment grade real estate for private and institutional clients on a local, regional and national level.
*Links to previous U.S. vs. Canadian Student Housing blogs