Location: West Lafayette, Indiana

Background

In 2016, Campus Advantage was engaged by an owner/operator of a conventional 731-bed multi-family property in close proximity to Purdue University. The property marketed mostly to young professionals and was struggling to reach occupancy over 75%. Campus Advantage took over management and Catalyst, Campus Advantage’s marketing partner, was engaged to rebrand the property to better appeal to students and graduates. Campus Advantage’s Students First® residence life programming was implemented, along with a strong marketing and leasing campaign. The property underwent capital improvements which were highlighted in the new marketing materials. With the new marketing approach to strategically target students, and by improving the overall resident experience, the property was able to reach 100% occupancy in both 2017 and 2018, renewed over 55% of residents in 2018, and achieved 8% rent growth following the property improvements.

Location: Orlando, Florida

University: University of Central Florida

Background

The Verge, built in 1999, was the eleventh acquisition for Campus Advantage’s programmatic joint venture with a large state pension plan. The Property is a purpose-built student housing community in Orlando, FL, located one mile from the University of Central Florida campus, consisting of 312 units and 930 beds. The Property offers one-, two-, three- and four-bedroom apartments and is served by the University shuttle service.  At the time of acquisition, The Verge offered amenities including a resort style swimming pool, grilling area, 24-hour fitness center, volleyball, tennis and basketball courts, and 24-hour access to the computer center and game room. This asset was historically very highly occupied, but at the expense of maximizing rental rates.

Objectives

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. In addition, Campus Advantage identified unit upgrades that would provide long term utility savings for the property (common area) and the residents (units).

Implementation and Execution

Working with Kelle Contine Interior Design and Integrity Property Solutions, Campus Advantage made approximately $6M in capital upgrades.  Exterior upgrades included a total roof replacement, addition of vehicle and pedestrian gates, installation of LED lighting in breezeways, light poles and wall packs, and landscaping enhancements.

To meet the needs of today’s students, several amenities were repurposed. An existing outdoor basketball court was converted to a new enclosed, club-sized fitness center.  The movie theatre was converted into a new fitness-on-demand space with spin bikes, medicine balls and yoga equipment.  The pool area was enhanced by resurfacing the deck, eliminating a dated fireplace and replacing it with a custom-built fire pit, along with the addition of an outdoor kitchen.  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.

Unit upgrades included installation of faux wood flooring in the common areas and bathrooms, replacement of bedroom carpet, all new appliances, addition of faux wood blinds to the common area, upgraded LED lighting throughout the unit, new framed-in mirrors and lights in the bathrooms, granite countertops with undermounted sinks in the kitchen, new bathroom counters, sinks and faucets, and new HVAC units and thermostats in every apartment.

Effective Rental Rate

In-place average effective rents were $591 for the 2015/2016 academic year when the property was acquired.

Although renovations were only just beginning, The Verge grew rents by 5.9% for the 2016/2017 academic year, compared to 1.8% for the previous academic year achieved by the seller.

Renovation premiums were fully realized with lease-ups for the 2017/2018 academic year, achieving an average rent of $702, a 20% increase from the pre-renovation rates.

Occupancy

The occupancy rate was 99% for the 2015/2016 academic year when the property was acquired.

Post-acquisition, The Verge reached 100% occupancy for both the 2016/2017 and 2017/2018 academic years. As of January 2018, The Verge is 20% ahead of the prior year’s pre-leasing velocity and tracking for an additional 4.6% rent growth.

Net Promoter Score

Property survey results indicated a 30% increase in resident satisfaction with their accommodations, and the Net Promoter Score for the property (likelihood to recommend the community) improved to 81% post-renovation.

Operational Cost Savings

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 NOI grew by 32%.

The Verge – Pool Deck (Before)

The Verge – Pool Deck (After)

Location: Tampa, Florida

University: University of South Florida

Campus Advantage was hired as a third-party manager of ON50, a 444-bed student housing property in South Florida, when a large institution acquired the property with a partner in 2010. Campus Advantage later acquired ON50 in 2014 when the property came up for sale. It was acquired in part due to its excellent location in Tampa, Florida, across 50th Street from the University of South Florida campus. Built in 1998, the property offers one-, two-, three- and four-bedroom units and 15 different unit types. The challenge for Campus Advantage was in dealing with this large variety of unit types and placing tenants together within the various units. From a physical standpoint, Campus Advantage also had to find solutions to the issues caused by deferred maintenance.

Upon acquisition, Campus Advantage immediately implemented a value-add strategy to refresh the property. The plan devised by Campus Advantage and sister marketing firm, Catalyst – a real estate marketing specialist agency – included a refreshing of the brand to create a new look and feel, updating the amenity package, and upgrading 30% of apartment units.

To address deferred maintenance, the team replaced all of the roofs, re-painted the entire exterior of the property, cleaned the mature landscaping, and renovated a select number of units to modernize, installing vinyl plank flooring, upgrading bathrooms including vanities, and replacing HVAC systems. A large portion of the $224,000 capital investment went towards improving amenities to meet the expectations of students in the South Florida market, including a complete revamp of the pool area and the addition of an outdoor game area in the courtyards. The completed property now offers a computer lab with free printing, a billiard and study lounge, as well as a community kitchenette with attached event area. The property also offers a full-size outdoor basketball court, an oasis style pool, a resort style hot tub, a 10-acre nature preserve, a hammock garden, and a recreational courtyard with bocce balls, horseshoes, cornhole and ring toss.

To further elevate interest in the property, the marketing specialists at Catalyst worked with the on-site team to revitalize the property’s brand with a vibe the student audience could relate to. As part of the Campus Advantage family of properties, residents were able to enjoy the signature residence life program Students First™, a unique approach to resident living which fosters a dynamic, engaged community and offers a pool of resources to support residents’ journeys to success. The integrated marketing and residence life approach, combined with the capital investment strategy, worked to enhance the overall appeal of the property in the marketplace.

By implementing this unique strategy, Campus Advantage increased the value of ON50 and closed on its sale in April 2017. In the 36 months from its acquisition date to the sale of the property, Campus Advantage achieved Net Operating Income growth of 17.1%, or 5.2% compounded annually. Residents of ON50 were able to benefit from Campus Advantage’s expertise while the company enjoyed a quick and profitable return on its investment.