Student Housing Business

JUL-AUG 2018

Student Housing Business is the voice of the student housing industry.

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COMPANY PROFILE July/August 2018 StudentHousingBusiness.com 48 W With a strong foundation in the self-storage sector, SmartStop Asset Management entered the student housing business two years ago as part of an initiative to diversify into alter- native commercial real estate sectors. Having launched into the self-storage business 15 years ago when it was considered an alternative property class, the company looked around for other asset types it considered on the cusp of becoming more mainstream. The company, which manages more than 8.7 million square feet of self-storage in 118 facilities, wanted to diversify its holdings and offer its inves- tors more choice. The company felt student housing had similar attributes to self-storage: short-duration leases, fragmented ownership, the ability to serve as an inflation hedge, and brands can be built around properties. "You can create economies of scale, student housing is not recession-proof, but it has some recession-resistant traits," says H. Michael Schwartz, chairman and CEO of SmartStop. With the decision to enter student hous- ing, SmartStop hired John Strockis to lead the company's investment in the sector, as well as in seniors housing, which it began invest- ing in around the same time. Strockis worked for CBRE for 24 years, much of that time at CBRE Investors, the company's ownership arm. As a result, he immediately contacted CBRE's Dallas-based student housing invest- ment sales team, led by Jaclyn Fitts. Through that relationship, a SmartStop entity was able to acquire a property near the University of Nevada-Reno, closing in December 2016, from The Dinerstein Companies. Because the transaction had been so efficient, Dinerstein brought another deal to SmartStop a few months later near the University of Arkansas in Fayetteville. SmartStop entities have acquired five student housing communities over the past 15 months. Asset Campus Housing was hired to man- age both the Reno and Fayetteville properties. Seeing how efficient SmartStop was in acquisi- tion, ACH's development division, AssetPlus, offered the company a new student housing development it was completing near Florida State University in Tallahassee. A SmartStop entity acquired the property in September 2017. "After that, word started getting out, and deals started flowing," says Strockis. A SmartStop entity acquired a fourth prop- erty — its third from Dinerstein — near the University of Michigan through CBRE, closing in January 2018. Simultaneously, a SmartStop entity was able to acquire another property near the University of South Carolina in early February. "We have been investing in student housing with a very disciplined formu- la," says Strockis. "We focus on pedestrian-to-cam- pus, Class A, pur- pose-built or sub- stantially renovated communities. We want communities that we can rebrand and increase value through investment." The company likes universities that have Division I football and an enrollment of 15,000 or greater. ACH is presently managing all five SmartStop student housing assets. SmartStop's corpo- rate headquarters is in Ladera Ranch, California; the com- pany has no geo- graphic restriction on where it will acquire properties. SmartStop has built its business through funds that are sold through broker- dealers to retail investors. As many investors diversify their portfolios, SmartStop wanted to provide its investors with another option, with the same trustworthy name they knew and experienced. "We find that many people have a personal experience with the student hous- ing sector, but they have no idea of the value proposition of the rent-by-the-bed model," says Strockis. "We explain that living close to campus with strong amenities makes students more productive." Like its self-storage properties, SmartStop is creating a brand around its student hous- ing properties. SmartStop studied the stu- dent housing property market for a year with a design consultant to create the YOUnion Student Living brand. It is in the process Smart Move SmartStop Asset Management has launched in the student housing space, making buys from established developers and owners. By Randall Shearin H. MICHAEL SCHWARTZ Chairman and CEO SmartStop JOHN STROCKIS Chief Investment Officer, Student and Senior Housing SmartStop SmartStop acquired The Summit near the University of Nevada-Reno in December 2016 from The Dinerstein Company. The 709-bed property has been rebranded as YOUnion at Reno.

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