Century City-based private equity giant Ares Capital Management has formed a partnership with The Scion Group to scoop up quality off-campus housing assets in college towns across the U.S.

Ares will join forces with the world’s largest student housing owner and operator in its biggest bet yet on the high-demand, supply-stripped sector. Andrew Holm, head of U.S. diversified equity for the local firm’s $117-billion real estate division, said the deal is proof of Ares’ ability to execute on complex opportunities. 

“By combining our scaled real estate platform with Scion’s strong capabilities, we believe we are well positioned to unlock value across this portfolio and capitalize on the continued institutionalization of the student housing sector,” Holm said in a statement.

In their first move as partners, Ares and Scion collaborated to buy a 7,578-bed portfolio for $910 million spanning a dozen properties, each in a high-growth university market, from Harrison Street Asset Management. Acquiring purpose-built assets near the Ohio State University, the University of Florida and more, will plug the firms into the sought-after Southeastern Conference and the Big 10. 

‘Important milestone’

The transaction represents an “important milestone” for Chicago-based Scion, Chief Executive Robert Bronstein said in the release.

“This sector continues to demonstrate resilient demand characteristics, and we are pleased to expand our platform alongside Ares,” Bronstein said.

The student housing market is in a rebound phase after interest rate hikes in 2023 slumped transaction volume way below a short-lived post-pandemic peak. Private investors – especially private equity firms sitting on mountains of dry powder – have been a primary buyer in the market for the past three years, Cushman & Wakefield reported.