BLUE SKY CRACKS STUDENT HOUSING IN US

BLUE Sky Alternative Investments (ASX:BLA) continues to up the ante in the student accommodation market, this time in the US.

The Brisbane-based fund manager has formed a joint venture with Student Quarters, an independent student housing investment manager with approximately 5000 beds under management.

Based in Atlanta, Student Quarters invests in properties that are within walking distance from large public university campuses demonstrating strong enrolment and demographic trends.

Blue Sky US investment director Fabian Roche says student accommodation in the US was a highly attractive asset class with the potential for large portfolio transactions.

"The market's fragmentation provides a great opportunity for aggregation, with strong yield opportunities along the way," Roche says.

"We think the risk profile of student housing is highly attractive and remains underpriced.

"Student housing is a resilient asset class as demonstrated by relatively steady occupancy and rental rates through the last recession. The long-term fundamentals of college enrolment should provide a durable tailwind for the sector.

"We were very impressed with the entrepreneurialism and track record of the Student Quarters team. Their expertise and long-held relationships will be critical to finding high quality deals, and we felt they were a great fit for Blue Sky culturally."

The US is the world's top destination for foreign students, closely followed by the UK and then Australia.

According to JLL, global tertiary enrolments are expected to reach 263 million by 2025 - up from 165 million in 2011.

With an estimated 2.4 million purpose-built student housing beds for more than 20 million students, the US student housing market is still highly fragmented. The top ten players own about 10 per cent of off-campus stock.

Student Quarters president Andy Feinour says the partnership will build on the team's experience in development, core and add-value segments.

"Blue Sky has built a successful student accommodation platform in Australia and we look forward to drawing on our collective expertise over here in the US," Feinour says.

"Student Quarters is actively on the hunt for quality assets, but will continue to be quite selective. We know the markets we like and where we can add value - whether through repositioning, property upgrades or improved asset management."

Blue Sky launched its Australian student accommodation division last year, and opened its first site in Brisbane in July.

The group acquired a majority stake in Australian student accommodation operator The PAD earlier this year, through its joint venture with Goldman Sachs.