Century City-based Ares Management Corp. and Core Spaces will acquire a portfolio of five student housing assets valued at more than $400 million. 

Funds for the partnership are managed by Ares Real Estate Group. The five student housing properties being acquired have 2,700 beds and amenities. 

“We’re excited to partner with Core Spaces and add these five newly constructed properties to Ares’ strong and growing U.S. multifamily portfolio, which today includes approximately 25,000 units across over 85 properties,” David Roth, head of U.S. real estate equity for Ares Real Estate Group, said in a statement. “This transaction highlights Ares’ ability to transact across the risk/return spectrum through our well capitalized core, value-added, and opportunistic investment programs.”  

“Our in-house experience owning, developing and lending on student housing properties gives us great perspective into the relative value in the sector compared to the broader multifamily universe, and we believe this transaction was the perfect opportunity to capitalize on that insight,” he added.

TSB Capital Advisors advised Ares and Core Spaces.

The five assets are just the initial investments for the partnership, which is looking to further grow its student housing portfolio nationwide. 

“We are proud to partner with Ares and capitalize on the strong market backdrop supporting U.S. purpose-built student housing investment adjacent to Tier 1 universities,” Marc Lifshin, co-founder and chief executive of Core Spaces, said in a statement. “We look forward to continuing to work with Ares to grow a premier portfolio in this attractive real estate sector.”

Student housing has historically done well during periods of economic uncertainty as more people go back to school. 

These properties are also generally leased further ahead of time than other multifamily properties. And in competitive multifamily markets like L.A., the properties do very well. This school year, despite the pandemic, the USC student housing market was 100% pre-leased, according to data from Jones Lang LaSalle Inc.

The turnover from year to year is a benefit to some landlords because rents can rise drastically from year to year instead of small amounts seen in areas with tenants sticking around from year to year and rent control.