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Canada Pension Plan Investment Board (CPPIB) said on Monday it had agreed to buy a student housing portfolio in the United States for around $1.4 billion, in partnership with Singapore wealth fund GIC and The Scion Group.
The three parties said they had formed a student housing joint venture, Scion Student Communities, which will acquire University House Communities Group (UHC). The price includes the cost of completing current development projects.
CPPIB, which manages Canada's national pension fund and is a major global dealmaker, last year acquired Liberty Living, one of Britain's biggest providers of student accommodation, for 1.1 billion pounds ($1.6 billion).
Canadian pension funds are looking to buy real estate assets around the world to diversify their investments and offset the effects of volatility in global equity markets and diminishing returns from fixed income investments.
CPPIB and GIC, which manages Singapore's foreign investments, will each own a 47.5 percent interest in UHC. Scion, a private operator of student housing, will own the remaining 5 percent. The UHC portfolio is concentrated among top-ranked U.S. universities with large student populations and comprises nearly 13,000 beds, CPPIB said.
CPPIB said the joint venture would pursue additional opportunities to purchase high quality U.S. student housing assets.
"The UHC portfolio represents a valuable opportunity to enter the U.S. student housing sector with top-tier, well-located assets," Peter Ballon, CPPIB's head of real estate investments in the Americas, said in a statement.
"This transaction enables us to gain immediate scale in the attractive U.S. student market," he added.