Student Housing Business

MAR-APR 2018

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

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Page 34 of 128

THE SHB INTERVIE W March/April 2018 34 A The Dealmaker Tim Bradley and his TSB companies are considered part of the family by many student housing owners, investors and developers. SHB gets Bradley's take on the industry. Interview by Randall Shearin and Richard Kelley TSB Realty brokered the sale of Terrapin Row, a 418-unit, 1,493-bed student housing community adjacent to the University of Maryland, on behalf of Toll Brothers and affiliates of Ares Management. It marked the largest 2017 single asset trade in student housing. As one of the industry's true insiders, Tim Bradley gets around. Most weeks, he is on a plane to visit one of his companies' many clients. Phoenix-based TSB Capital arranges all types of financing — from construction to permanent, from capital partners to struc- tured — for student housing owners and developers. TSB Realty, based in suburban Philadelphia — arranges strategic property and portfolio sales. SHB recently caught up with Bradley between trips to get his opinion on where the industry is, and where 2018 will take it. SHB: What are the major trends in the stu- dent housing industry now? Bradley: Over the last year and a half we've seen the continued institutionalization of the student housing sector with many new capi- tal sources entering the space: large institu- tional private equity funds, pension fund separate accounts, foreign develop-to-core capital, and other open-end core funds. The steady influx of new capital remains the pri- mary driver of cap rate compression in the student housing space today and we expect more name-brand investors to seek the attractive risk-adjusted returns student hous- ing offers while providing diversification from the four major commercial real estate food groups. As the student housing sec- tor has evolved, it has transitioned to high- er-end, institutional quality buildings with average development costs today between $50 million and $150 million for new Class A pedestrian-to-campus construction. We've come a long way since the first funds raised by Harrison Street and Kayne Anderson — who were really the first institutional players to invest in student housing developments and acquisitions outside of the public REITs — at a time when most equity check sizes were in the $8 million to $12 million range per deal. Today, project costs and values look a lot like conventional multifamily, but while the student housing sector has gained favor in the institutional world, we are still early in our sector's growth trajectory. A sign of the sector's strength is its appeal with foreign investors today. Mapletree and GIC are two examples of foreign firms who have made big wagers on U.S. student housing in the past few years, along with CPPIB and others. TSB Capital Advisors successfully negotiated a non-recourse senior loan for The Mark Athens, a mixed-use student housing community containing 300 units, 928 beds and 80,000 square feet of retail/commercial space, located adjacent to the University of Georgia in Athens, Georgia. The Mark Athens is also the new home to Landmark Properties' corporate headquarters.

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