Student Housing Business

SEP-OCT 2018

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

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48 September/October 2018 INVESTMENT SALES WHERE STUDENT HOUSING POTENTIAL Meets PERFORMANCE A Top 10 Buyer of Student Housing since 2007, Pierce Education Properties is a major national investor and operator of student apartments. Through our acquisitions of core, core plus and value-added assets, we have: • Completed more than $970+ million in acquisitions since 2007, representing more than 23,000 beds • Targeting $400+ million in acquisitions over the next three years • Developed extensive capital relationships for best-in-class investment capacity and execution Our growing team continues to maximize value through positive investments. We are industry leaders with proven experience, innovation, and success. P i e r c e e d u c a t i o n P r o P e r t i e s . c o m Contact our acquisitions team at 619-297-0400 or email mmaruccia@PierceEducationProperties.com to discuss potential opportunities. INVESTMENT SPOTLIGHT: The Connection at Athens is a 876-bed, 340- unit community conveniently located just east of University of Georgia in Athens, GA. $970+ MILLION IN ACQUISITIONS ing for a year to prove out that they don't require concessions in the marketplace." Investment sales professionals say that the caveat of having operations under the belt on new developments is very market dependent. If a mar- ket is highly desirable, and it has the history of churning out fully leased new projects, a developer may go ahead and list. If market fundamentals are weaker, the developer may hold for a year to demonstrate the project's performance to potential buyers. "For markets that aren't experiencing a large influx of supply and have strong uni- versity fundamentals, developers are still selling in the first leasing cycle," says Sean Baird, director of the national student hous- ing group at Colliers International. "For com- munities in markets where a large supply is coming online, or enrollment has become flat or declined, developers need the second leas- ing season to prove out the strength of their asset." In the past, some sellers have brought prop- erties to market in the second or third quarter to "beat the rush," as Fitts says. That has resulted in more complicated purchase-and- sale agreements (PSAs) where lease rate and occupancy provisions are incorporated. "That can really complicate the PSA in the negotiation phase," says Fitts. "One of the reasons people waited this year was because of occu- pancy and having their rent rolls finalized, as well as having those dif- ficult PSA negotiations." What's Coming To Market This year, there have been fewer portfo- lio offerings brought to market, according to CBRE's mid-year Student Housing Report. More one-off, or individual, transactions are occurring at a strong velocity to create a high- volume transaction market for 2018. Many brokers reported that the first three quarters of the year were lighter than normal, but that they expect heavier volume in the fourth quarter of 2018. "The past few years, it has been a feverish year-round pace," says Gonzalez. "This year's pace falls more in line with the market sec- tor in 2015 and before. We've settled a little bit more back into an academic year leasing cycle." "This is the time of year when everything is coming to market," says Fitts. "So far, it is a nice mix of different assets, including core and value-add." "We are seeing sales of a lot of different types of inventory," adds Gonzalez. "We are still getting the most amount of interest on strong core properties or value-add near cam- pus properties." With core properties, the more criteria a property fills, the more interest it will have from buyers. "Long-term owners with strong capital continue to seek core pedestrian stu- dent housing in the top markets," says Tim Bradley, principal of TSB Realty and founder of TSB Capital Advisors. "The pool of buy- ers is deeper if the properties have operating history." SEAN BAIRD Director, National Student Housing Group, Colliers International TIM BRADLEY Principal of TSB Realty and Founder of TSB Capital Advisors GREG GONZALEZ Director of Student Housing, Berkadia

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