Student Housing Flexes its Muscles with Illini Tower Sale

In a transaction that demonstrates the inherent strength of the red-hot student-housing market, an Australian firm recently purchased the 725-bed Illini Tower in Champaign, IL, for approximately $60 million.  Do the math and you’ll find that the cost-per-bed adds up to a whopping $82,758.  The building serves students of the University of Illinois at Urbana-Champaign.

The 16-story structure’s purchaser is Campus Living Villages, a Sydney, Australia-based firm that owns 10,000 student beds in Australia and New Zealand, and an additional 30,000 beds in 41 properties in the United States.  The seller was Chicago-based Walton Street Capital, LLC, which had purchased the building just five years ago for $29.6 million, and spent approximately $6 million on capital improvements.

The significance of the transaction is that despite the fastest rising inflation in almost 30 years, the relative weakness of the dollar and of American securities on global exchanges, foreign capital still sees the United States as a safe haven in the right categories.  Student housing cap rates continue to be strong, outpacing inflation and showing no signs of abating as college enrollments top 17 million a year.