09-28-2005, 11:02 AM
| | Working with Student Housing Properties
Capturing the driven demographics introduced by Universities in their
communities, a number of private equity groups and several REIT's have now carved
out a specialty niche in the larger housing arena.
Our over-all impression is that a number of institutional investors and
lenders perceive this investment space as being relatively stable and
characterized by a lesser annual turn-over.
The corollary, however, is that it typically requires a greater management
intensity and may exhibit a lesser expectation of a property appreciation.
The Underwriting criteria on acquisitions are likely to be :
* The University complex is at a minimum of 10,000 persons.
* The student housing properties are at 100 to 500 units.
* On single assets, a value at a minimum of $7 million.
* On portfolios, a minimum of $25 million.
* Students are at a minimum of 50% of the tenants in the properties.
* Built 1980 or thereafter.
Correspondingly, the Underwriting criteria on a conventional lending are
something like the following
* A minimum of $3 million.
* Term at seven to 15 years.
* Amortization at 25 years.
* Loan-to-value at 75% to 80%.
* Debt coverage at 1.25x.
If you wish to discuss your project, please feel free to call Mr. Margolin
of Chilmark Associates Inc. at 203-353-0897:
[Non-text portions of this message have been removed]