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.
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.
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.
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.
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
Non-Recourse: Yes to Trust
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