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REA
June 05, 2019  

Calif. Listing Could Set Student-Housing Mark

A Carmel Partners team is marketing a sprawling student-housing community near Sacramento that could double the U.S. price record for the asset class.

The 200-acre complex, on the campus of University of California, Davis, is expected to attract bids of about $475 million. It encompasses 2,289 beds in 663 units. At the estimated value of $208,000/bed and $716,000/unit, the buyer’s initial annual yield would fall in the range of 5% to 5.5%.

San Francisco-based Carmel and its partner, Urban Villages of Denver, are shopping the leasehold interest in the high-end property via CBRE. The underlying ground is leased from the university for close to 60 years.

The student-housing price record was set last October when Chicago-based Scion Group paid $235 million for a complex next to the University of Maryland’s main campus in College Park. That valued the property, which has 1,573 beds in 507 units, at $149,000/bed and $464,000/unit. CBRE brokered the sale for a Rockpoint Group partnership.

The community in Davis, called West Village, is at 1580 Jade Street, adjacent to Route 113. It’s divided into three properties that are 98.2% leased: The Ramble (384 units, built in 2011), The Viridian (123 units, built in 2012) and The Solstice (156 units, built in 2013). The average unit size is 1,023 square feet and the amenities are billed as “top of the class.” The property, which benefits from a tax exemption, also includes 43,000 sf of retail space, a recreation center and study facilities.

Marketing materials tout the prospect for continued rent growth, noting that enrollment at the Davis campus has risen for 13 straight years.

The West Village community, which opened in 2011, emphasizes its energy efficiency. It’s described as the nation’s largest “zero net energy” neighborhood — designed to generate the same amount of energy it consumes.

A separate partnership broke ground this year on a $575 million expansion of the West Village neighborhood that is the largest student-housing construction project in the country. The 3,300-bed property, called The Green at West Village, will have nine four-story buildings on 34 acres. The university is teaming up on the project with Michaels Organization of Marlton, N.J., and the nonprofit Collegiate Housing Foundation. Completion is scheduled by 2021.