Ashland Pacific Launches $150M JV with ICM

Ashland Pacific and Integrated Capital Management have launched a $150 million joint venture to acquire student housing assets on the West Coast. The joint venture will operate as Ashland Pacific Integrated, and Ashland Pacific will serve as a managing member.

“Our approach to aggregating sub-institutional/mid-market student housing properties has been in the works for a few years,” Julio Davila, CEO & President of Ashland Pacific. “We wanted a capital partner that not only understood the strategy but was excited about the opportunity to execute on something that has not received enough attention from institutional operators or capital. ICM had an interest in the space and wanted to help an operator grow over time. The synergies between the firms in terms of investment strategy and culture set the foundation for the JV.”

ICM has targeted large sub-institutional portfolios and mid-sized assets, a strategy that is informing the joint venture’s mission. “Often times these assets are considered too small and too time intensive for most institutional investors to focus on and therefore the predominance of assets are owned and managed by less sophisticated operators,” says Robert Lindner, managing principal of ICM. “Our capital empowers our partners to identify and acquire assets that we believe have significant opportunity to increase income per asset and, through the aggregation of a larger portfolio, both lower expenses and investment risk. ICM’s JV with Ashland Pacific is a perfect example of how we overlay institutional operations and underwriting to sub-institutional sized individual assets in order to unlock tremendous value.”

The joint venture has already purchased its first asset, a nine-property student housing portfolio near USC for $18 million. “We have aggressive goals over the next 3-5 years, but it always depends on the right opportunity,” says Davila. “Downtown LA continues to have a great need for student housing so we’ll look to add to our portfolio whenever we can.  Generally, however, we’d like to acquire around $20M in the coming 12 months.”

The fund has a five-to-seven year life span to bring the properties through their full business plan. “When ICM backs a sponsor as part of our venture allocation strategy, we typically want to give our partners approximately 3 years to aggregate assets plus an additional 2-3 years to implement their value-add business plan,” says Lindner. “As a result, we typically will underwrite a target exit within 5-7 years of the first acquisition.”