Student Housing Business is the voice of the student housing industry.
Issue link: https://studenthousingbusiness.epubxp.com/i/488341
SHB INTERVIE W MARCH/APRIL 2015 STUDENT HOUSING BUSINESS .COM 68 SHB: Same with Kayne Anderson? Smith: Yes. Our former CIO had a relationship with KAREA's head of investment and they put the deal together and had it close in two parts. We closed on two properties — Rise at Northgate and Level at Tucson — in fall of 2013, and then an additional three in fall of 2014 — Next at Tucson, Fuse at Purdue and Mountain Lofts at BYU-I. Those were all off-market. We felt like the climate was right to consider those for disposition. Meanwhile, we were rebuilding our entire pipeline. We came out with nine projects and 5,500 more beds for 2015 delivery. SHB: What are the company's plans for the present and future for student housing? You've got a lot of development underway right now, we know. Smith: CA Student Living will continue to grow rapidly in under- served Tier 1 — and possibly some Tier 2 — university markets where barriers to entry are high, universi- ty-owned beds are low, where we can assemble core-infll pedestrian locations suitable for high-density, ground-up development. CA plans to own and operate 30,000-plus beds within four to fve years and intends to fll that goal about 75 percent through our own devel- opments and 25 percent through acquisitions of existing core assets. After our notable dispositions, CA Student Living currently owns and operates about 3,000 beds in six markets. CA currently has nine properties (5,500 beds) being deliv- ered in fall 2015 and intends to deliver another eight to 10 proper- ties for fall 2016 and 2017, respec- tively, including some combining hotel uses with student apartments under one roof. We are even taking our CA Student Living model inter- nationally with a handful of mid- rise 10- to 15-story developments in South America, set to break ground soon. SHB: Your product is fairly high- end. Do you worry there are too many new high-end student hous- ing rental properties? Smith: The reality is that where we're developing and the types of buildings we're building are kind of forcing our hand into the higher end of the rent scale, given land basis and core location being much higher than an outskirts location. Most of the vertical construction is exponentially more expensive than garden-style apartments. Its really a function of where these projects are being built but we're keeping a close eye on it in terms of each individual market and how many projects have been delivered with the top-tier rent scale. We are def- nitely cognizant of it and not every- one can pay top dollar. We saw our land purchase from Campus Crest Group as an opportunity to diversi- fy; we really want to have a portfo- lio that isn't just playing in the top 2 percent of the population. We view the CCG development sites we've acquired as a bit of portfolio diver- sifcation. We'll be offering a lower price point in our other urban high- rise in-fll projects. SHB: How diffcult is it to fnd and assemble the sites you guys typical- ly do on your urban infll? What's the magic there? Smith: It's extremely diffcult and it is getting harder, I would say — certainly at the tier-one fagship institutions. We're rolling up our sleeves and being persistent and I think our ability to react and per- form quickly in the transaction has now aided us in building our pipeline. We recently toured a site in Fort Collins, Colorado. The next morning, after our tour, we geared up for a closing on the site and did just that in about 10 days. You have to react quickly in the competitive land environment we're in for these core opportunities. SHB: How did the Campus Crest land portfolio purchase come about? Was that an ideal situation? Smith: We have a good relationship with a mutual equity partner, so we were shown the nine properties initially. We bid on three sites origi- nally, then six. Tom Scott has a rela- tionship with a group called Core Investment, and they came to us with a broader strategy to go after a larger number of the properties knowing that Campus Crest would be motivated to make a simple transaction that would take many of those properties off the books at 14850 Quorum, Suite 145 Dallas TX, 75254 www.texlahousing.com 972.677.7532 Specializing in Acquisition, Management and Investment of Student Housing properties throughout the U.S. Landmark at College Park is an 829-bed mixed-use property near the University of Maryland that CA is developing with R&J; Companies.