Forum Asset Management’s Real Estate Income and Impact Fund (REIIF) has a definitive agreement to acquire Alignvest Student Housing Real Estate Investment Trust‘s nationwide, 17-property portfolio for $1.686 billion.
The transaction, expected to close at the end of 2024, will make REIIF the leading owner of purpose-built student accommodations (PBSA) in Canada, the two companies state in their announcements Wednesday morning.
Including the Alignvest portfolio, REIIF will own and manage nearly 10,500 beds in university markets across the country. With this increased scale, Forum plans to further expand its PBSA development program, addressing what has been a growing need for student housing in supply-constrained markets across Canada.
“This combination marks a pivotal step in Forum’s journey and is a testament to our team’s hard work and dedication in building a leading alternative asset manager,” Richard Abboud, the founder and CEO of Forum Asset Management, said in the firm’s media release. “The transaction builds upon Forum’s 28-year history of delivering extraordinary outcomes to our stakeholders, while reinforcing our commitment to delivering much needed, high-quality and professionally managed housing for students across Canada.
“We look forward to welcoming Alignvest unit holders to our institutional-quality platform.”
ASH REIT and its portfolio
ASH REIT was launched in 2018 to consolidate what it calls “the fragmented, institutional grade, purpose-built student accommodation real estate sector across Canada”. Over the past seven years, the trust has built a portfolio of 17 properties with 7,159 beds across seven university-focused markets.
Closing of the transaction remains subject to customary conditions and regulatory approvals. Alignvest unit holders will vote on the transaction in November.
The purchase price will be paid in cash and units of Forum REIIF, and represents what Alignvest calls “a substantial premium to ASH REIT’s current net asset value in its own announcement of the pending transaction. Alignvest lists its current appraised asset value at $1.44 billion.
“We are very pleased to have entered into this transaction with Forum, which will deliver an attractive return on investment to ASH REIT’s unitholders. Importantly, we have structured a transaction which will allow our unitholders to roll their units into Forum REIIF on a tax-deferred basis for Canadian income tax purposes,” Sanjil Shah, managing partner of ASH and trustee of ASH REIT, said in its release. “With this transaction, our unitholders will have the opportunity to continue to participate in the Canadian student housing sector, which has consistently experienced high demand and is expected to keep delivering strong investment returns.”
“We are very pleased to deliver a transaction that reflects the investment opportunity we identified when we launched ASH. Over the past several months, we have built a strong and collaborative relationship with the leadership team at Forum,” Reza Satchu, managing partner of ASH REIT’s parent company Alignvest Management Corporation, added in the release. “This transaction, with nearly 10,000 beds, will result in the largest student housing platform in Canada, and benefit from expected scale efficiencies.
“Our unitholders will have access to Forum’s substantial development pipeline, which should facilitate further growth. AMC is pleased to support this transaction by committing to roll 100 per cent of our units in ASH REIT, representing over $50 million, and together with the shareholders of ASH, almost $100 million, into units of Forum REIIF.”
Nancy Lockhart, chair of the ASH REIT board of trustees, said the board unanimously recommends shareholders accept the deal.
Options for ASH REIT investors
Alignvest unitholders will have the option to roll their existing investment into REIIF on a tax-deferred basis, offering them exposure to a diversified, new-generation portfolio of PBSA, furnished rentals, and multi-family assets. The investment would offer increased portfolio scale, more diversification and expansion into university markets not served by REIIF today.
Both REIIF and Alignvest unitholders will also gain access to Forum’s over $3 billion development pipeline as new projects are delivered.
“Combining REIIF and Alignvest’s portfolio creates a leading PBSA portfolio in Canada, broadening REIIF’s reach in key university markets, while also enhancing unit holder exposure to a larger proprietary pipeline of high-quality projects located in Canada’s top markets, ensuring continued growth of the Fund,” Aly Damji, Forum’s managing partner, real estate, and REIIF fund head, said in the release.
“Our focus on delivering professionally managed, community-driven housing for students reflects our commitment to ensuring students have access to the high quality living environments.”
Forum is a Toronto-based investor, developer and asset manager operating across North America for over 28 years. The firm’s investment focus includes real estate, private equity, and infrastructure.
The enterprise value of its assets under management exceeds $1.7 billion.
REIIF invests principally in institutional-quality, multifamily rental apartments, purpose-built student accommodations and furnished rentals located in supply constrained markets in Canada.
