Why Academic Assets Are a Smart Play

Knightstone Capital Management bought the Best Western Primrose Hotel on Jarvis Street and is revamping it into a university residence. It’s building another in a JV with University of Toronto, and a mixed-use campus complex for Centennial College. VP Patrick Miksa tells us why academic assets are a clever play.

We snapped Patrick, Knightstone’s academic assets VP, at University Place, a 25-storey mixed-use project at College and Spadina (below) that’ll house 900 students. U of T, a project partner, will run the building’s food program, and there'll be ground-floor retail. Patrick says Knightstone began focusing on academic assets seven years ago after firm principal Dave Lehberg dropped off his daughter at university and saw its student residences were the same as when he attended the same school in the '80s. "We recognized there was a need for updated accommodation."

The Primrose Hotel, acquired by Knightstone in February and rebranded The Parkside, is in the midst of a $26M overhaul to convert it into a student residence: new windows, re-cladding and a glass-covered entryway (seen below) to replace a concrete-enclosed driveway. “We hold our assets long-term, so we’re not just putting new paint and paper on the walls,” Patrick says. “We’re going right back to the bones.” (Fun fact: the 275k SF slab tower was originally built as a student residence but became a hotel instead.) HOOP is an investment partner on both projects.

In Scarborough, Knightstone is partnering with Centennial College to build an $85M, 353k SF student complex. The LEED Silver vertical campus (below) will have space for 740 students. The ground level will house a 53k SF culinary arts centre, with six kitchen labs, full-service teaching restaurant and eight classrooms. This will be tied in with a top-floor conference and banquet centre that accommodates 425 guests. In having Knightstone develop the facility, Patrick points out, Centennial can focus on its core competency, “which is educating students, not housing.” 

While student housing hasn’t traditionally been regarded as a viable asset class in Canada—“previous investors and developers had Animal House in mind”—Patrick notes the benefits to building new facilities: steady cash flow and strong growth potential (the industry is in its infancy, and there are 1 million full-time students on 82 Canadian campuses, many in subpar housing). And schools now recognize that secure condo-style accommodation is key to luring talent: “They need to ensure their housing and technology matches that of other institutions in North America and the world.”