Student Housing Business

MAR-APR 2015

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

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SHB INTERVIE W STUDENT HOUSING BUSINESS .COM MARCH/APRIL 2015 67 invest in these properties long term. We're real- ly starting to turn our focus toward long-term capitalization of these projects. SHB: A few years ago, the company sold most of its portfolio in separate dispositions in succes- sive years to American Campus Communities (8,500 beds) and Kayne Anderson (3,000 beds). You're building a large portfolio again. Could a deal like that happen again? If so, what would happen then? Would you continue to reorga- nize and get back into the game? Do you see a circumstance where someone knocks you out with an incredible offer that you'd be crazy not to take advantage of? Smith: First and foremost, we are an investment company. So we're constantly thinking about the viability of the assets individually and as a whole in the short run and long run. We're always exploring all options for the broader portfolio. I think it would be a long shot to dispose of an entire portfolio again, given our current capitalization structure that is going to allow us to hold our assets long-term but we will never say never. There might be one-off assets that are highly sought after by other frms and we're going to be all ears and explore all options. Our goal is to build the organization for a third time in terms of portfolio and own that for a long haul. SHB: Going back to the time of the company's deals with ACC and Kayne Anderson, can you give us more about why those came about? Did you have that high of a capacity for projects back then? Smith: Prior to the ACC sale, we hadn't sold any- thing in our nearly 10-year history. Our organi- zation was doing two to three core infll projects a year on the development side and doing those very well. As you know, core infll is now all the rage as REITs and others dispose of garden- style outskirts product in favor of it. Since then, we've taken that portfolio sale as a springboard to grow into a new and diverse, multi-asset class organization. We're really at our largest in terms of corporate/employee structure than we've ever been so there was never a downturn for us but more a steady, calculated evolution. The sale to ACC was an off-market transaction; we weren't setting out to dispose of our entire port- folio in 2011. We were approached directly. We didn't set out to do it, but we took advantage of what we felt were favorable market conditions and cap rates at the time and the strong demand for core infll product. Adjacent to the University of Washington in Seattle, the two buildings comprising Identity Apartments contain 100 micro units each.

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