A major U.S.-based student housing provider that plans to become a significant player in Canada has acquired the 12-storey, 188-unit Campus Common residence adjacent to Ryerson University in Toronto.
Blue Vista LLC of Chicago made the acquisition from the property’s developer and operator, Horizon Legacy, for $82.8 million. The purchase, one of the few large student housing acquisitions in Canada this year, closed earlier this month.
Located at 50 Gerrard St., at the corner of Church St., Campus Common’s location and the scarcity of student housing options in the downtown core were two of the key reasons Blue Vista made the acquisition, according to senior vice-president Patrick Flaherty.
“In studying this venture and picking our top (Canadian) markets that we wanted to invest in, Toronto and Ryerson University is certainly at the top of the list,” Flaherty told RENX.
“This is almost an irreplaceable location. You are surrounded on multiple corners by Ryerson University, you are right across from the (Ryerson) Square. You just can’t get, for student housing, a better located property at a university where there is such high demand.”
Blue Vista, Podium, Secure building in Kingston
While 50 Gerrard is the first acquisition for Blue Vista in Canada, it is not the private equity investor’s first foray into the market.
Both ventures are in partnership with what Flaherty called an “Ontario-based” pension fund, Podium and Secure. RENX has confirmed the pension partner is OP Trust.
“What really brought us north into Canada is one of the Ontario-based pension plans we’ve worked together with and had a relationship with,” Flaherty said. “We saw an opportunity, as did they, to transfer our expertise and what we’ve done in the States and bring it north of the border and launch this venture.
“We think by partnering and finding these opportunities we can really have an impact on what is potentially a less mature, but certainly growing and booming student housing market in Canada.”
Blue Vista owns and operates over $3.5 billion worth of student housing properties in the U.S. in conjunction with its affiliate Peak Campus.
It acts as property manager for the 75 properties at 56 campuses and will be a resource for Varsity Communities of Kingston, which property manages Blue Vista’s Canadian holdings.
Campus Common and Toronto student housing
Campus Common was constructed in 2007 and is one of very few student housing properties to sell in Toronto in recent years.
Colliers International senior sales representative Dayma Itamunoala said the last such transaction involved a hotel conversion three years ago. That meant few price points for comparison and strong competition for 50 Gerrard.
“I think the purchasers saw a unique opportunity to own an irreplaceable location in the centre of downtown Toronto,” he said. “This is a property which has 40 per cent turnover as opposed to conventional apartments in the GTA, which have less than 10 per cent turnover. So, you are always going to be at market rents.”
The purchase price works out to over $440,000 per unit and $240,000 per bed, “which you rarely see in Toronto.”
“We led a robust marketing effort, searching far and wide for a purchaser that would be the right fit. . . . A purchaser with credibility and the right business plan,” Itamunoala said. “As evidence of that, three of our 10 highly credible offers actually were from outside Canada.”
Blue Vista plans value-add program
Blue Vista considers itself a long-term holder and operator of its student housing assets. It sees the acquisition as a value-add opportunity.
“Our plan is to do a value-add renovation of the amenity spaces and the interior of the units, bringing it up to the standard of the new product that is being delivered today, like our Kingston project,” Flaherty said.
“Much larger fitness studio, co-working study spaces, larger clubhouse area, infrastructure systems such as integrated wifi and telecom.”
It plans to replace the units’ flooring, cabinets and appliances, and provide them as furnished accommodations.
“The bones of the building are fantastic. Really you are just injecting a bit of a revitalization into the property,” Flaherty said.
“We’re also planning on furnishing the property . . . basically, turnkey living. You basically show up with your suitcases, you already have your furniture in the unit, you have all of your utilities included, it makes it a very easy, seamless process.”
Future growth for Blue Vista in Canada
Looking ahead, Flaherty said Blue Vista is seeking acquisition and development opportunities “coast-to-coast” across Canada.
“We’re looking for, on the acquisition side, high-quality either recently redeveloped or developed properties. Again because we are a long-term holder we want to invest in highest-and-best, or properties where we can run a value-add like the Ryerson acquisition.
“On the development side, it’s the same thing. We are looking for the best and highest quality. Some of these markets don’t have enough housing available so you need to build it. Queen’s is a great example of that.”
The Kingston project involves three student housing buildings which will contain about 1,400 beds in 788 units when all three phases are complete. Phase 1 at 333 University Ave., will contain 204 units and 350 beds. It is under construction with a planned completion date of summer 2021.
Phase 2 (195 units, 309 beds) and phase 3 (374 units, 712 beds) will both be on Princess St., and would follow in 2022 and likely 2023, Flaherty said.
“Our goal is to be a major player in institutional student housing investment in Canada. We do want to aggregate a large portfolio, either through acquisitions or development, over time and leverage the experience we’ve had in the States toward that goal.
“We see a lot of growth in this sector . . . so we’re looking to the next 12 months or so to be quite active for us.”
Itamunoala said Blue Vista won’t be alone in looking to grow its Canadian student housing presence.
With the interest shown in 50 Gerrard, the opportunity for consolidation and the potential for major growth as the COVID-19 pandemic ends and students begin travelling more extensively again, he expects to see more interest and activity in coming months and years.
“I think so, at least for the larger assets,” Itamunoala said. “I mentioned some of the bidders were from out of the country.
“In the U.S., they have a much more mature student housing market and some of those players have shown they really want to have a footprint in Canada.”
EDITOR’S NOTE: This article was updated to include additional information about the involvement of Secure Capital in the partnership, as well as the breakdown of the three phases in the Kingston development.