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London Investor Sees U.S. Multifamily as Best Positioned for Next 5 Years

Even Student Housing Appeals to Henderson Global Investors
November 14, 2012
Henderson Global Investors raised another $50 million for its latest U.S. multifamily housing fund - CASA Partners V, taking in a total of $155 million equity to date. It is targeting a total $250 million equity raise before its final closing date at year-end, representing an initial gross portfolio size of up to $750 million (including a maximum loan-to-value of 65%).

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CASA V is the fifth in a series of successful US value-add multifamily housing funds that seeks to profit by integrating value-enhancing strategies with low-cost tax-exempt bond financing.

London-based Henderson said it regards the U.S. apartment market as one of the best-positioned sectors over the next five years. Multifamily housing is widely recognized as one of the nation’s largest and healthiest real estate sectors. Apartments are anticipated to have the most favorable occupancy and rent growth conditions of all asset classes.

Institutional investors have significantly increased their ownership of the apartment asset class over the past two and a half decades due to its stable cash flows, diversification benefits and abundance of advantageous debt financing, the group said.

“Henderson’s CASA Fund series has been very well received by investors, having successfully invested, operated and liquidated through all points in the investment cycle,” said Jay Martha, head of Henderson’s North America property business, and co-portfolio manager for CASA V. As a result, Martha added, two of its first close investors recently made additional commitments to the fund.

Since its launch, CASA Partners V has acquired seven apartment assets across its target markets, and has an active pipeline of further investments. Total equity invested so far amounts to more than $91 million with assets acquired in Illinois, Texas, Florida, Washington and North Carolina.

Recent sales (amounting to $93 million) from an earlier fund in the CASA Series include apartments in Washington DC, Delaware and Texas. These dispositions generated Net internal rates of returns of 19.4%,10.6%, and 21.8% for Henderson’s CASA II clients.

Student Housing a Growing Option

In addition, the core commingled Henderson North American Property Fund recently sold an office building in California for $12 million.

Henderson Global in North America has also announced plans for a new institutional club investment opportunity targeting the U.S. student housing market. The Henderson Student Housing Opportunity will invest in high quality by-the-bed student housing properties across target markets within the U.S., and has a current active pipeline of investments.

Henderson will acquire and operate assets both directly and through joint ventures. For direct investments, third-party specialist campus property manager, Greystar, will be used for on-site management. Joint venture investments will be made in partnership with best-in-class student housing owner/operator, Pierce Education Properties, which will be responsible for the day-today management of those properties.

“Henderson believes the student housing sector possesses strong near-term demand/supply characteristics and is attractively priced relative to other sectors. By aligning with specialist student housing operators, Henderson is well positioned to access investment opportunities and deliver strong performance for its investors,” said AJ Richard, director of portfolio management, Henderson North America.

Henderson intends to acquire eight or nine student housing assets, at an average purchase price of $25 million, for an initial gross portfolio size of $215 million (including a target loan-to-value of 50%).

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