Student Housing Business

MAR-APR 2018

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

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TOP INVESTORS March/April 2018 80 Chicago-based Heitman. The investment fund manager has co-invested in a number of stu- dent housing properties in recent years. Notable movers in RCA's top 20 buyers include Coastal Ridge Real Estate (number 12), which has acquired eight properties over the past 24 months, includ- ing a number with the number 20 investor H. Katz Capital Group. Among the properties Coastal Ridge and H. Katz have acquired is the 732-bed Arlington Cottages and Townhomes near Louisiana State University in Baton Rouge. Aliso Viejo, California-based Nel- son Brothers (number 14) has also been on a buying spree. The com- pany, which moved into SHB's Top 25 owners in 2017, has acquired more than $265 million in student housing over the past two years. Conventional multifamily owner Waypoint Residential (number 16) has also acquired nearly $250 million in student housing, enter- ing the sector steadily but swiftly. Like Waypoint, Atlanta-based Preferred Apartment Commu- nities (number 19) has also pur- chased a number of properties in the student sector and launched a student housing management company, Preferred Campus Management. Pricing While overall sales volume may have been lower in 2017 than 2016, year-over-year pricing across all classes of student housing con- tinued its rise. For the third year in a row, pricing reached new highs for student housing assets, according to Four Point Student Housing's Year-End Report. The company reports that pric- ing on a per bed and per square foot basis rose 15 percent over 2016, with Class A sales having an average sales price of $102,972 per bed, the first time that figure has been over the $100,000 mark. Properties in class A portfolio sales traded at a higher rate, with an average of $107,590 per bed; $256 per square foot. Four Point notes that the portfolios sold in 2017 were generally newer, higher density and better located com- pared to those transacted in 2016, factors that account for the pricing increases. For Class B and C properties, Four Point reports the average price per unit was $44,661 per bed, $184 per square foot. The average cap rate for student housing was 5.98 percent, drop- ping just two basis points from 2016. Four Point cites the quick maturation of the student hous- ing industry — referring to the influx of institutional capital to the industry — as the main reason cap rates are leveling off for the sector. The Four Point Student Hous- ing Year-End Report 2017, data from which much of this section is synopsized, is polybagged with this issue for all subscribers. A note about the data Real Capital Analytics ranks top inves- tors by the individual company's total value of investment in the sector over the past 24 months. Often, multiple compa- nies are involved in the same deals, so sales volume for the industry cannot be calculated using this data. The data also does not roll up or credit purchases by entities like LLCs who are affiliated with larger companies. For this reason, some large buyers who acquire through LLCs and other similar vehicles may not be included in the RCA data, even though their total acquisition volume may be greater than those ranked. Scion Student Communities acquired three portfolios in 2017. Included in one of the portfolios purchased from Harrison Street was Varsity Quarters, a 162-bed project near the University of Wisconsin in Madison.

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