Student Housing Business

JAN-FEB 2018

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

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CAPITAL MARKETS UPDATE January/February 2018 StudentHousingBusiness.com 46 spread between higher end prod- uct and everything else." "It is hard to see an environ- ment where cap rates can go down much more than they have been over the past six to 12 months," says Ryan Tobias, founding partner with Triad Real Estate Partners. "While there is a lot of interest rate uncertainty, it is more likely that you will see cap rates static this year, unless inter- est rates make a big jump." Institutional investors like American Campus Communities (ACC) have continued to focus on core properties in top markets. "ACC's investment criteria is focused solely on large, Tier 1 markets with a primary focus on public Power 5 and Carnegie R1 universities," says William Talbot, executive vice president and chief investment officer at ACC. "We have found that these large uni- versities offer the most stable and consistent long-term enrollment demand due to their continued value proposition, while often also lacking modern on-campus housing options." Class A projects in Tier 1 mar- kets are at a premium for a reason. The barriers to entry are generally high for pedestrian-to-campus properties. As well, enrollments at Tier 1 institutions are not growing by large percentages; that means that the need for new supply is limited. At second tier universi- ties, meanwhile, enrollments are generally growing, and universi- ties haven't been able to keep up with their own housing needs, causing them to rely on private developers to fill the void. "Investors are realizing that sec- ond tier institutions is where a lot of enrollment growth is occur- ring, so they are starting to adjust their investment criteria to go into those markets," says Vonderfecht. "The institutional groups and international money are more in the core space," says Tobias. "In general, we are seeing more core type deals. That is a product of where we are in the cycle. There aren't as many value-add deals as there were a few years ago, and there have been a lot of core deals." "Institutional investors, REITs and sovereign wealth funds con- tinue to show a preference for core, newly built properties, located pedestrian-to-campus," says Kligman of Vesper Holdings. "Conversely, syndicators and pri- vate equity groups are currently gravitating toward value-add deals, including slightly older assets that are not necessarily pedestrian-to-campus." According to those interviewed for this article, value-add contin- ues to be a strong play for many buyers, with Tier 1 and Tier 2 measured through results. C E R TA I N T Y I S B E R KADIA .COM a Berkshire Hathaway and Leucadia National company Commercial mortgage loan banking and servicing businesses are conducted exclusively by Berkadia Commercial Mortgage LLC and Berkadia Commercial Mortgage Inc. This advertisement is not intended to solicit commercial mortgage loan brokerage business in Nevada. Investment sales / real estate brokerage business is conducted exclusively by Berkadia Real Estate Advisors LLC and Berkadia Real Estate Advisors Inc. In California, Berkadia Commercial Mortgage LLC conducts business under CA Finance Lender & Broker Lic. #988-0701, Berkadia Commercial Mortgage Inc. under CA Real Estate Broker Lic. #01874116, and Berkadia Real Estate Advisors Inc. under CA Real Estate Broker Lic. #01931050. For state licensing details for the above entities, visit: http://www.berkadia.com/legal/licensing.aspx ┬ę 2018 Berkadia Proprietary Holding LLC. Berkadia┬« is a registered trademark of Berkadia Proprietary Holding LLC. MORE THAN 54,000 BEDS SINCE 2015 IN STUDENT HOUSING 120 TRANSACTIONS SINCE 2015 IN STUDENT HOUSING $2.5B+ DEBT AND SALES SINCE 2015 IN STUDENT HOUSING INVESTMENT SALES Kevin Larimer 248.341.3305 Greg Gonzalez 312.845.3091 MORTGAGE BANKING Peter Benedetto 248.208.3462 Aaron Moll 248.208.0529 WILLIAM TALBOT EVP and CIO, American Campus Communities RYAN TOBIAS Founding Partner, Triad Real Estate Partners

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