Virginia Commonwealth University

Student Housing Case Study: Virginia Commonwealth University

New Development

Richmond, VA – Client: 8 ½ Canal

Campus Advantage was originally retained in September 2009 to perform a market profile of the Virginia Commonwealth housing market. The focus of the analysis was to make general assumptions regarding the on- and off-campus housing market at VCU and evaluate the potential demand for a new student housing development. As a direct result of the data gathered during the market profile, the developer then engaged the CA team to conduct a more in-depth analysis of the project and produce a full Market Analysis and Project Feasibility Study. This level of research required members of the Campus Advantage team to travel to Richmond to meet with VCU and City of Richmond officials, as well as perform intercept surveys with VCU students.

Campus Advantage concluded that the Richmond student market had the depth to absorb the proposed project, given the fast-growing student population at VCU and the project’s superior location. The site was located in an up-and-coming area of the market, due to recent campus expansion. Additionally, the off-campus Richmond market lacked any purpose-built student product. The majority of the properties surveyed in the main student housing corridors had very limited amenities, especially those geared toward students, such as a residence life program or all-inclusive rates. 8 ½ Canal was the first purpose-built property to enter the Richmond market and offered a plethora of amenities. The property also introduced an abundance of four-bedroom apartments, a unit type only found in one other off-campus property.

Construction on 8 ½ Canal began in summer 2010 for a fall opening in 2011. The Campus Advantage team was once again engaged to perform the initial operations and lease-up of the property, pre-leasing the property to 100% before it opened in fall 2011. The fast lease-up and continued success of the property exhibits the desirability of purpose-built product in an untested market.

The building includes 160 units with 540 beds on six levels and parking on two levels. 8 ½ Canal is also an eco-friendly project which was designed with green principles in mind in accordance with the LEED accreditation system.

524 Angliana

Student Housing Case Study: 524 Angliana

Project Results: Property opened for fall 2009 at 75% occupancy. Achieved 100% occupancy fall 2010. Successful exit fall 2010 with a purchase price of $43 million, a realized capital gain of approximately $7.3 million, and an equity multiple of 1.8x.
  • Role: Design consulting, market analysis/feasibility, initial operations/lease-up, property management
  • Location: Lexington, KY (University of Kentucky)
  • Open: August 2009
  • Total Cost: $35.7 million
  • Equity: $8.9 million
  • Beds: 740
  • Strategy: Purpose Built Development

8 1/2 Canal

Student Housing Case Study: 8 1/2 Canal

Project Results: Property opened for Fall 2011 at 100% occupancy. Through the first six months of operations, NOI is 11% ahead of budget with a projected year 1 NOI of approximately $3 million, for a yield on cost of 11%. The current market value is estimated at $38.5 million.
  • Role: Design consulting, market analysis/feasibility, initial operations/lease-up, property management
  • Location: Richmond, VA (Virginia Commonwealth University)
  • Open: August 2011
  • Total Cost: $27 million
  • Beds: 540
  • Strategy: Purpose Built Development

The District on Luther

Student Housing Case Study: The District on Luther

Since Acquisition: The property was purchased at approximately 25% below replacement cost. A $2.4 million capital plan was initiated to bring the property more curb appeal and enhance the clubhouse and amenities. Campus Advantage managed the asset prior to purchase, giving us a unique perspective into its potential in the marketplace. NOI is a cumulative 7.8% above pro forma NOI since inception.
  • Role: General Partner of JV with Institutional Investor
  • Location: College Station, TX (Texas A&M)
  • Acquisition: May 2010
  • Total Cost: $27.09 million
  • Beds: 1,098
  • Strategy: Value-Add
  • Loan-to-Cost: 54%

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The Knox

Student Housing Case Study: The Knox

When ideal location meets differentiated value driving a 95% pre-lease rate and pre-leasing revenue at 101% of projections, you know there’s more than luck involved. And that was certainly the case with The Knox, a new student housing property completed in August 2016 near University of Tennessee in Knoxville, TN, developed by Campus Advantage and Pinecrest.

As the result of an advanced ranking analysis of 240 university markets, Campus Advantage identified the University of Tennessee as a market ripe for new housing. After identifying the market, Campus Advantage evaluated three different sites and chose the one with an irreplaceable location.

The development sits in a transitional zone with historical significance on one side of the block consisting of low density early 19th century housing, and the other side of the block unfettered zoning-wise, facing a 12 story University of Tennessee Residence hall. Entitling the site within an historical district required a great deal of flexibility. Working closely with the local historic Fort Sanders neighborhood group, Kelly Grossman Architects, and Kelle Contine Interior Design to ensure the design integrated with the surroundings, the project incorporates a high density modern mid-rise on the side of the site facing the university with a more traditional, lower density three story walk-up with faux porches to fit the historical context facing the historic district. They are brought together by a large outdoor green roof deck.

To achieve strong occupancy and rental rates compared to other similar projects in the market, the project ensured on-time delivery in its initial lease up. It additionally offers amenities geared towards outdoor leisure activities, nice weather and the active nature of Knoxville residents, including a 12,200 SF outdoor green roof deck that boasts multiple hot tubs, televisions, cabanas, grills and an outdoor fireplace as well as a “Starbucks-type” lounge, game centers, study rooms, a clubhouse and a state-of-the-art fitness center.

  • Role: Developer, Manager, Marketer
  • Location: Knoxville, TN (University of Tennessee)
  • Entitlement & Design Timeline: June 2013 – Feb 2014
  • Ground breaking: November 2014
  • Delivery: May 2016
  • Beds: 385
  • Strategy: Merchant Build
  • Hard Construction Cost: $20.3 million
  • Total Development Cost: $29.1 million
  • Loan-to-Cost: 70% (hypothetical)
  • 7.43% Yield on Cost (pro forma)
  • 26.2% IRR (pro forma)
  • 2.1x MOIC (pro forma)

Campus View

Student Housing Case Study: Campus View

Campus View presented a unique opportunity to acquire an older, first-generation student housing asset managed by a conventional apartment owner/operator. The property suffered from deferred maintenance and a lack of student housing focused management. Upon acquisition, Campus Advantage implemented its Students First™ Residence Life program as well as invested nearly $2.8 million in capital. Over the course of the next five years, Campus Advantage was able to secure and grow a master lease arrangement with the University of Missouri, as well as renovate nearly 70% of the interior units. The property was sold in July 2014.
  • Role: General Partner of JV with Institutional Investor
  • Location: Columbia, MO (University of Missouri)
  • Acquisition: March 2008
  • Beds: 656
  • Strategy: Value Add
  • Purchase Price: $13.5 million
  • Total Investment: $16.2 million
  • Loan-to-Cost: 68% (loan assumption)
  • Sold July 2014 for $27.2 million
  • NOI Increase since Inception: 154%
  • Outperformed Pro Forma NOI by 23%
  • 25.1% IRR (realized)
  • 3.1x MOIC (realized)

The Marq

Student Housing Case Study: The Marq

The Marq was 81% occupied at acquisition and had a poor reputation in the Marquette student-housing market. The asset had dated and unused amenities in addition to lacking typical student-housing amenities, such as a computer lab and sufficient Internet bandwidth. Upon acquisition, Campus Advantage invested $830,000 in capital improvements to update and make additions to the common area amenities. The capital improvements included a complete renovation of the first floor lobby/clubhouse and laundry facilities, and the addition of a computer lab, a yoga studio with Fitness On Demand, a fresh market, a study room, and a tanning room. The Internet bandwidth was increased and connectivity issues fixed. In addition to the physical transformation, the property went through a complete rebrand from “2040 Lofts” to “The Marq,” which included a new logo, website, and all advertising materials through Catalyst.
  • Role: General Partner of JV with Institutional Investor
  • Location: Milwaukee, WI (Marquette University)
  • Acquisition: March 2014
  • Beds: 612
  • Strategy: Value Add
  • Purchase Price: $26.6 million
  • Total Investment: $28.1 million
  • Loan-to-Cost: 38%
  • Occupancy stabilized at 96.2% for 2015-16 AY
  • YOY effective rate growth of 3.1% for 2015-16 AY
  • NOI Increase since Inception: 49%
  • 35.5% IRR (unrealized)
  • 1.61x MOIC (unrealized)