The Verge

Location: Orlando, Florida

University: University of Central Florida

100%
Occupancy

32%
NOI Growth

24.6%
IRR

2.62x
MOIC

The Challenge

Campus Advantage acquired The Edge in Orlando, Florida, in March 2016, and was the 11th acquisition for Campus Advantage’s programmatic joint venture with a large state pension plan. Built in 1999, the property served as purpose-built student housing consisting of 312 units and 930 beds that was located one mile from the University of Central Florida campus.

At the time of acquisition, The Edge offered a decent amenities package and historically was very highly occupied, but at the expense of maximizing rental. Campus Advantage sought to renovate the property to drive revenue, provide better use of the space and amenities for the residents, improve the property clientele and reduce bad debt, and maintain the historically high occupancy the property had achieved.

The Solution

Campus Advantage immediately implemented a value-add strategy to reposition the asset as a luxury student housing community. This plan included refreshing the brand, creating a new look and feel, updating the amenity package, and upgrading all apartment units.

Catalyst, Campus Advantage’s affiliated marketing ﬁrm, worked with the on-site team to rebrand the property with a vibe the student audience could relate to. The property was well-liked by residents and the community, so Catalyst selected the name, The Verge, as a nod to the community’s past. Catalyst also created a new logo, color palette, brand guide, marketing materials, property signage, and promotional items. A VIP pool party successfully revealed the new brand, created buzz in the marketplace, and generated new leads.

Working with Kelle Contine Interior Design and Integrity Property Solutions, Campus Advantage made approximately $6 million in capital upgrades — an improvement plan designed to exceed students’ growing expectations. Capital improvements in the common areas included a new pavilion grilling area and an outdoor kitchen by the pool, LED lighting, new walkways, doggie waste stations, roof work, upgraded HVAC units, a hammock garden, and a ﬁre pit. The pool deck was resurfaced and features updated pool furniture. The community is now gated, and all amenities require an electronic key to enter.

Residential unit improvements included wood-style ﬂooring, black appliances, LED lighting ﬁxtures, ceiling fans, granite countertops, new plumbing ﬁxtures, laminate countertops, 42” TVs, and more. In addition, the IT infrastructure was upgraded with new wireless radios throughout and increased bandwidth, providing much quicker speeds and wireless access to all residents.

The Results

Residents and UCF students appreciated the refreshed brand and property improvements. The Verge achieved 100% occupancy and 9% rental rate growth in fall 2016 before all capital improvements were in place, and achieved an additional 12% rental rate growth and 100% occupancy in fall 2017. In addition, there was a 30% increase in resident satisfaction, while the net promoter score (NPS) for the property (likelihood to recommend the community) improved to 81% post-renovation.

From an operational cost savings measure, the installation of exterior LED lighting resulted in a 20% reduction to common area electric expense. The replacement of the HVAC units and the installation of LED lighting to unit interiors reduced unit utility expense by 40%. From 2016 to 2017, the overall net operating income (NOI) grew by 32%.

The purchase price of the property was $50,125,000 with an investment of $57,608,218. In May 2021, The Verge was sold for $93.9 million, achieving a 24.16% leveraged internal rate of return (IRR) and a 2.62x equity multiple on invested capital (MOIC).

The Verge – Pool Deck (Before)