Memphis, TN Student Housing, DST

Memphis, TN

ASSET CLASS:  Class A Student Housing
OFFERING SIZE:  $13,396,000
MINIMUM INVESTMENT:  $50,000
LEVERAGE:  57%
YEAR BUILT:  2017
UNITS:  114
BEDS:  385
CURRENT OCCUPANCY:  96%
HOLD PERIOD:  5-6 Years
TARGETED YR.-1 RETURN:  6.25%

Built in 2017, The Property consists of 114 units with 385 total beds. The property features an excellent unit mix of 2-, 3- and 4- bedroom units. Every bedroom has its own private bathroom.

All leases are 12-month contracts, guaranteed by the student’s parent or other co-signers. There is on-site security, along with the most advanced security technology in the market including gated access and a gated parking lot. Luxurious amenities feature a 24-hour fitness center, yoga room and 7,000+ SF clubhouse, business center and game room area, offering a healthy school/ life/social balance.

Each unit is fully furnished with separately keyed bedrooms, gourmet kitchens, high-end finishes, 50” inch at-screen TVs with free cable/HBO, and in-unit washer and dryers.

MARKET POSITIONING

Adjacent to the university, the property is within true walking distance to almost every area on campus. The Sponsor views this to be the best location in the market, and excellent real estate. As the newest property with a premium location, top security and minimal competition, The Property is well- positioned to remain consistently well-occupied with the potential to raise rents and appreciate in value – especially if the university grows enrollment as expected.

Stability and Cash Flow

Leverage the historical economic stability of the University of Memphis and the property’s location adjacent to campus to potentially preserve high occupancy, year-in, year-out, with a consistent pro table cash ow. We feel these are the benefits of the property, even during a national recession.

Tax Shelter

With the low land value compared to building value and a favorable 27.5 year depreciation schedule, the Sponsor is targeting up to 100% tax shelter through depreciation.

Capital Growth Potential

Because the Property is a high-end property adjacent to campus and the university plans to grow enrollment by as much as 4,000 students, the Sponsor believes the supply-demand relationship could be exceptionally favorable. This could help raise rental rates, improve net income and appreciate the value of the property.

Holding Period

Designated 5-6 year holding period. This can change, given the popularity of student housing as an investment category. One of the advantages of agency financing is the assumability of the loan. This decreases the cost to exit by mitigating the prepayment penalty and can help preserve value should interest rates increase over the ownership period.

Potential Recession Resilience

College enrollment throughout the U.S. has historically shown minimal correlation to economic cycles. As a result, NB Private Capital believes well-positioned properties near major universities can prove resilient to a recession. While an economic downturn might impact the holding period strategy, the Sponsor believes the continuity of cash flow, even during a recession, can afford investors the ability to be patient and opportunistic on the exit.

Adjacent to the university, the property is within true walking distance to almost every area on campus. The Sponsor views this to be the best location in the market, and excellent real estate. As the newest property with a premium location, top security and minimal competition, The Property is well positioned to remain consistently well-occupied with the potential to raise rents and appreciate in value, especially if the university grows enrollment as expected.

Strong demand for student housing assets exists: After declining during the years following the 2008/2009 recession, college and university enrollment has steadily increased at campuses across the U.S. in the years since. As such, there is a significant need for safe, affordable and accessible student housing. Additionally, as with colleges and universities across the country, the traditional dormitory experience of communal bathrooms and bunk beds at schools is being challenged by community-based and typically off-campus, purpose-built student housing properties.The current average age of dorm facilities at universities exceeds 40 years. Student housing offers additional attractive qualities including:

The student housing sector tends to be less economically sensitive than the overall apartment sector, due to the stability of demand throughout the economic cycle.

College enrollment has tended to rise steadily over time. This has been particularly the case during recessionary periods, as more people look towards higher education to improve their employability and earnings power when the broader economy suffers.

Targeted 1st-Year Cash-on-Cash Return: 5.25% + 13th bonus rent payment targeted to be 1%
Targeted Cash Range: 6.10% - 6.60%
Targeted Cash Average: 6.21%

Loan Amount: $17,700,000
Term: 10 Years Fixed
Interest Only Period: 5 Years
Amortization Period: 30 Years
Interest Rate: YTD
Lender: Prudential Family Mortgage, LLC
LTV: 57.00%
Non-Recourse: Yes to Trust

DST Due Diligence & Advisory Services

(415) 336-9225

DISCLAIMER
The contents of this communication: (i) do not constitute an offer of securities or a solicitation of an offer to buy securities, (ii) offers can be made only by the confidential Private Placement Memorandum (the “PPM”) which is available upon request, (iii) do not and cannot replace the PPM and is qualified in its entirety by the PPM, and (iv) may not be relied upon in making an investment decision related to any investment offering by the issuing company, or any affiliate, or partner there of the issuer. All potential investors must read the PPM and no person may invest without acknowledging receipt and complete review of the PPM. With respect to the “targeted” goals and performance levels outlined herein, these do not constitute a promise of performance, nor is there any assurance that the investment objectives of any program will be attained. These “targeted” factors are based upon reasonable assumptions more fully outlined in the Offering Documents/ PPM. Consult the PPM for investment conditions, risk factors, minimum requirements, fees and expenses and other pertinent information with respect to any investment. These investment opportunities have not been registered under the Securities Act of 1933 and are being offered pursuant to an exemption therefrom and from applicable state securities laws. Past performance and statements regarding current occupancy and earnings are no guarantee of future results. All information is subject to change. You should always consult a tax professional prior to investing. Investment offerings and investment decisions may only be made on the basis of a confidential private placement memorandum issued by the issuer, or one of its partner/issuers. The issuer does not warrant the accuracy or completeness of the information contained herein. Some offerings are subject to a “cooling off” period and are not available to all investors. 
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Securities offered through Emerson Equity LLC Member: FINRA/SIPC. Only available in states where Emerson Equity LLC is registered. Emerson Equity LLC, and the issuer are not affiliated.