The Scion Group announced Wednesday that it will buy the operating business of Student Quarters, an Atlanta-based owner, operator and manager with interests in roughly $1.5 billion in student housing assets, according to a June 10 press release.
Scion is funding the acquisition, which includes 13,000 beds across 21 markets, from its own balance sheet without any outside investors or financing, per the release. The price was not disclosed.
The Student Quarters deal encompasses 29 buildings, Robert Bronstein, CEO of the Chicago-headquartered student housing giant, told Multifamily Dive in emailed comments. When Scion considers potential acquisitions, he said it starts with the university.
“We continue to focus on large public institutions with strong enrollment, solid long-term fundamentals, and significant student populations. Many of those schools are located in growing Sun Belt states, and we're particularly attracted to universities that continue to invest in programs that drive demand, including STEM fields,” Bronstein said.
At the property level, the firm is focused on communities that appeal to a broad range of students, according to Bronstein.
“We have generally stayed away from the highest-priced segment of the market and instead look for properties that offer strong value and affordability,” Bronstein added.
Scion is in a “historic period of growth and investment,” with aggregate capital deployment activity exceeding $5 billion over the last two years, Bronstein said in the release. This transaction combines Student Quarter’s operating platform and presence in high-quality university markets with Scion’s national scale, expertise, technology infrastructure and centralized operating capabilities.
“Student Quarters represents a compelling opportunity to extend our platform with a high-quality operating business while partnering with an experienced team that we’re excited to work with,” Bronstein said. The buy will expand Scion’s national platform to 190 communities and nearly 118,000 bedrooms spanning 94 university markets.
The Student Quarters portfolio has a 77% market overlap with Scion’s existing footprint, and this alignment is expected to support integration, per the release. Scion anticipates meaningful efficiency gains, increased net operating income and margin improvement throughout the Student Quarters-managed portfolio, supported by its own centralized systems and operating infrastructure.
Student Quarter’s senior leadership will retain asset ownership positions and remain actively involved post-closing, per the release. Scion will retain Student Quarter’s Atlanta office and will integrate the platform into its national operations, maintaining continuity across property-level teams and existing investor relationships.
The transaction is expected to close in the third quarter of this year, subject to customary closing conditions, per the release.
Student housing consolidation revving up
The firm sees movement toward consolidation in the historically fragmented student housing market, where scale matters more than ever.
“Scale allows firms to invest in specialized teams, technology, data analytics, revenue management, and resident services that drive better outcomes for both residents and investors,” Bronstein said. “We believe those trends are contributing to increased consolidation across the sector.”
Operational complexity today means much more than leasing and property management, Bronstein said.
“Residents expect instant communication, digital tools, strong security, and a high-quality living experience. At the same time, owners are managing rising costs, technology investments, compliance requirements, and increasingly sophisticated operating demands,” Bronstein said.
As consolidation accelerates, Scion said it is well-positioned to leverage its size, infrastructure and institutional capabilities to unlock efficiencies, and it expects to see more opportunities to expand its platform through similar transactions.
Last month, Scion and affiliates of the private equity giant Ares Management Corp. teamed up to invest in off-campus student housing, saying the partnership reflects the firms’ “shared conviction in the long-term strength of the student housing sector.”
Scion and Ares’ first purchase together was a 12-property, 7,578-bed student housing portfolio spanning universities across the country, bought from Harrison Street Asset Management for about $910 million.
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