Another Student-Housing Bundle Hits Block
An Investcorp partnership is shopping three student-housing properties in Florida and Georgia that are valued up to $279 million, the latest in a string of portfolio listings to emerge in the sector in recent weeks.
The Bahrain investment manager and its partner, Preiss Co. of Raleigh, have tapped Newmark to market the 1,963 bed, 570-unit portfolio. The anticipated price translates to $141,000/bed, or $485,000/unit. Investors may bid on individual properties or any combination, but the preference is to strike a deal with a single buyer.
Despite the economic uncertainty caused by the coronavirus pandemic, the head of Newmark’s student-housing division, vice chairman Ryan Lang, said the sector has proven resilient, continuing to produce listings and generate investor demand.
So far, over 1,000 universities have announced plans to re-open in the fall, with fewer than 100 planning to operate mostly online, according to Newmark data. About 95% of those that intend to open are planning to mix in-person and online instruction — and to reduce density in dormitories, increasing the need for off-campus housing, Lang said.
As previously reported, Newmark last week began marketing a portfolio encompassing 1,979 units (3,353 beds) at nine properties near Washington State University campuses, with an estimated value of $235 million ($70,000/bed). The seller is Corporate Pointe Developers of Pullman, Wash.
Last month, multi-family REIT Preferred Apartment Communities of Atlanta tapped CBRE to market its 6,095-bed, 2,011-unit portfolio, valued at roughly $480 million ($79,000/bed). In a June 25 report, CBRE said it expects the student-housing sales market to “come back strongly this fall,” with strong fundamentals and low interest rates attracting investors “before many other product types recover in the wake of Covid-19.”
Newmark has closed one student-housing sale in the past two weeks — a 312-bed property near Texas A&M University — and has put another seven deals under contract in the past six weeks at pre-Covid pricing, Lang said. Of 12 sales it had under contract before the pandemic struck in March, two unraveled but the rest are scheduled to close by yearend.
Lang said much of the buyer interest is coming from foreign groups. He said there is considerable capital flowing from the Middle East and the Asia-Pacific region, representing 30% of all student housing transactions year-to-date.
To account for lingering concerns about whether campuses will indeed open as planned, Lang said his team has deliberately protracted the “call for offers” timeframe for both the Washington State portfolio and the Florida-Georgia listing to late August or early September, when students would have already moved into the buildings.
The Investcorp partnership’s offering, dubbed the Major Metro Student Portfolio, consists of properties within a half-mile of campuses of Georgia Tech in Atlanta, the University of Central Florida in Orlando and Florida Atlantic University in Boca Raton, Fla. All three universities have announced plans to reopen for the next school year. The portfolio is 90% pre-leased for the fall semester.
The properties are:
Signature West Midtown at 800 Marietta Street NW in Atlanta. Built: 2019. Beds: 525. Units 183.
University Park at 135 Northwest 20th Street in Boca Raton. Built: 2015. Beds: 598. Units: 159.
Mercury 3100 at 3100 Alafaya Club Drive in Orlando. Built: 1999. Beds: 840. Units: 228.
The schools have seen enrollment grow by an average of 32% since 2010, according to marketing materials.