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PHILADELPHIA-Campus Apartments Inc. has acquired a 14-property student housing portfolio from FirstWorthing Residential Co. LP for $256 million. It adds 6,517 beds in 2,381 units to locally based Campus Apartments' existing portfolio of more than 12,000 beds and extends the company's footprint nationwide.
The acquisition contains 12 existing properties in six states along with two development parcels. David Adelman, president and CEO of Campus Apartments, tells GlobeSt.com the majority of the existing properties are about 10 years old. They are in Tucson; Riverside, CA; Fort Collins, CO; Orlando; Raleigh, NC; and Baton Rouge and Lafayette, LA.
The development parcels are in Baton Rouge, "across the street from each other," Adelman says. His company plans to break ground for a mixed-use community by year's end. "The trend on campuses is to develop ground-floor retail to accommodate residents," he says. Costs have not been finalized, but Adelman says plans call for the construction of units with an aggregate of about 500 beds. It also plans to invest in cosmetic upgrades to some properties in the portfolio and is adding more than 150 employees to manage the acquired facilities.
The buy represents the largest private student housing transaction ever, according to Adelman. It "allows us to extend the Campus Apartments' brand to new university markets nationwide. It was a targeted acquisition, in line with the investment strategy we plan to carry out over the next few years."
Until now, the company's properties were all east of the Mississippi. "We've been targeting the West Coast for awhile," he says, adding, "we have more properties there in our acquisition pipeline."
The company's $1.1-billion JV with GIC Real Estate Pte Ltd., the real estate investment arm of the Government of Singapore Investment Corp., previously reported by GlobeSt.com, funded the acquisition. Deutsche Bank Securities Inc. was the financial advisor and Deutsche Bank Berkshire Mortgage provided $153 million in financing with Freddie Mac along with $30.5 million from Deutsche Bank's proprietary bridge lending program.
This is Freddie Mac's largest student housing transaction to date. "Freddie Mac views the student housing segment of the market to be an attractive expansion opportunity," says Mitchell Kiffe, Freddie Mac VP of multifamily production and sales, in a statement.
FirstWorthing Residential Co. LP is an entity of University Partners, the Atlanta-based student housing affiliate of Dallas-based FirstWorthing. Ryan Reid, national director of student housing in the Dallas office of CB Richard Ellis, represented the seller in this transaction. Campus Apartments spoke for itself with legal counsel from Philadelphia-based Klehr, Harrison, Harvey, Branzburg & Ellers LLP. Calls to Reid and University Partners were not returned by deadline.
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